The Bank of England is expected to raise rates to 4% tomorrow — its first hike since 2023

The Bank of England is widely expected to raise interest rates on Thursday, November 5 — and if it does, it will be the first increase since August 2023. The Monetary Policy Committee announces its decision at noon, alongside new economic forecasts, and the move on the table is a quarter-point rise taking Bank Rate from 3.75% to 4%.

The case for a hike is inflation. The Office for National Statistics reported that consumer prices rose 3.5% in the 12 months to September 2026, up from 3.1% in August and well above the Bank's 2% target — the highest rate in almost a year. The Bank's own September minutes projected inflation of around 3.75% in the final quarter of 2026 and slightly above 4% in the first quarter of 2027, driven by higher energy prices linked to the continuing conflict in the Middle East.

Markets and economists are unusually aligned. Derivatives markets imply a roughly 96% to 96.7% chance of a rise, and a Reuters poll of 63 economists conducted October 12–14 found 54 expecting the quarter-point increase. The committee was already divided at its September meeting, voting 6–3 to hold at 3.75%, with Megan Greene, Catherine L. Mann and Huw Pill voting for an immediate rise to 4% — and that minority is normally where the majority ends up a meeting or two later. Forecasts for the vote this time range from 6–3 to 7–2 in favour of a rise.

What happens after Thursday is where forecasters split. Oxford Economics expects a second quarter-point rise in February 2027, taking Bank Rate to 4.25%, and some market pricing points to three or four further quarter-point rises during 2027, toward 4.75% to 5%. Bloomberg reporting cited this week, however, put only about a 50% chance on another increase in early 2027. The Bank's last move was a cut in December 2025, which took the rate to 3.75% — so Thursday would complete a sharp reversal from the easing cycle markets expected at the start of 2026. The October 28 Autumn Budget, economists say, did little to relieve the pressure on the Bank.

For households, the mechanics are familiar: a higher Bank Rate usually feeds through to mortgage costs, especially for tracker and variable-rate borrowers, while savers may see slightly better rates on deposits — though banks are rarely as quick to pass rises to savers as to borrowers. The Bank's July Financial Stability Report projected that just over five million UK homeowners would face higher monthly mortgage payments by the end of 2028. For borrowers on fixed deals, nothing changes until the fix ends — which is why the vote split and the Bank's language about further rises matter as much as Thursday's single decision.

Why it matters beyond Britain: the Bank of England is the latest central bank to show the inflation fight is not over even as growth softens. Australia raised rates to 4.85% on Tuesday in a split 6–3 vote, and the U.S. Federal Reserve faces its December decision after Friday's jobs report.

What to watch: the vote split and the Monetary Policy Report at noon on Thursday; any signal on February; and how quickly lenders reprice mortgages.