Bank of England lifts Bank Rate to 4%, its first hike since 2023

On 5 November 2026 at 12:00 GMT (13:00 Paris time), the Bank of England (BoE) announced a 25 basis point increase in Bank Rate, taking it to 4%. According to the BoE's statement, its Monetary Policy Committee (MPC) voted 8 to 1 at the meeting that ended on 4 November, with the single dissenting member favouring a half-point rise to 4.25%.

An 8-1 vote for a quarter-point rise

The move takes the rate from 3.75% to 4%. Reuters, Investing.com and Seeking Alpha report that it is the central bank's first increase since August 2023, more than three years ago. According to Reuters, FXStreet and ActionForex, the dissenting vote came from Catherine Mann, an external MPC member, who backed a 50 basis point increase.

The shift had been building. At the previous meeting, on 17 September 2026, the BoE held the rate at 3.75% in a 6-3 vote, with all three dissenters already calling for a hike, according to FXStreet and Vantage Markets. The tightening camp therefore became the majority within a single meeting.

Energy at the centre of the BoE's assessment

According to the BoE's statement, UK consumer price inflation (CPI) rose to 3.5% in September, up from 3.1% in August according to MoneyWeek and Invezz. The Bank expects inflation to reach around 5% towards the middle of next year before easing. Staff projections put it at around 4.5% in the first quarter of 2027 and around 5% in the second quarter of 2027, more than twice the target.

The minutes published by the BoE set out the jump in energy costs. Over the 15 UK working days to 27 October, front-month Brent averaged 108 dollars a barrel and UK natural gas 216 pence per therm. Those levels are 38% and 81% higher respectively than at the time of the July report.

The BoE justifies its decision by pointing to inflationary pressures that are already under way, while noting that indirect effects on other prices and on wages remain limited. It adds that activity has been stronger than expected in recent months. The minutes also state that measures in the 28 October budget are expected to reduce inflation by around a quarter of a point by the second quarter of 2027.

Open guidance and a split committee

The BoE's statement rules out any preset path. The MPC will decide meeting by meeting, monitoring wages, prices and the degree of spare capacity in the economy, with the 2% medium-term inflation target unchanged. The next decision is scheduled for 17 December 2026, according to the BoE.

Comments by policymakers, as reported in the press, leave the door open to further increases. According to Reuters, MoneyWeek, ActionForex and Bloomberg, Governor Andrew Bailey said the hike does not necessarily mark the start of a long series, but that it is unlikely to be the last if the conflict in the Middle East is not resolved. Without news that eases inflation risks, he sees a case for another rise. Chief economist Huw Pill said a single 25 basis point move is probably not enough and pointed to further increases, according to Investing.com and Reuters.

Markets had already priced the move

The decision was widely expected, which explains the muted response. According to Investing.com, FXStreet and Bloomberg, sterling initially dipped against the dollar before recovering, holding broadly steady around 1.347 dollars. The FTSE 100 was up roughly 0.6% to 0.7% after the announcement, according to intraday snapshots from MoneyWeek and Reuters. Gilt yields were described as slightly higher by Reuters and MoneyWeek, and as little changed by Bloomberg.

Market expectations remain more hawkish than those of economists. After the decision, markets were still pricing about three further quarter-point hikes over 2027, according to Bloomberg and Reuters, more than most economists expect. The BoE minutes point to the same gap: in the Bank's survey of market participants, the median expected path for Bank Rate was 4% in November and 4.25% in February, below what the UK short-rate curve prices. The minutes also note that two-year reference mortgage rates have risen by almost 50 basis points since early September.

What it means for traders

For traders with sterling exposure, the hike itself held few surprises. Attention would now shift to the gap between market pricing, which assumes around three hikes in 2027, and a committee that refuses to commit to a path. Upcoming inflation and wage data could narrow or widen that gap and move GBP pairs, Gilts and the FTSE 100. The 17 December 2026 decision is the next scheduled risk event for these markets.

The weight given to energy in the BoE's assessment strengthens the link between sterling and the price of Brent and UK gas. Geopolitical news from the Middle East could therefore carry more weight in UK rate expectations, as Andrew Bailey's remarks suggest.

On the cost side, a higher Bank Rate could alter the overnight swaps that CFD brokers charge or pay on sterling positions held from one session to the next. Clients concerned would do well to check the swap rates shown in the symbol specification on MetaTrader, cTrader or their usual platform.

Prop firm traders, for their part, have an interest in checking whether their funding firm's rules restrict trading around high-impact announcements, including central bank decisions, before opening positions on GBP or the FTSE 100 during those windows, as breaches can count against the daily loss limit or other account rules.

Finally, the rise in mortgage rates highlighted by the BoE could weigh on UK stocks most exposed to domestic demand, such as banks, real estate or FTSE 250 constituents.