The Bank of England raises its key rate to four percent and warns more may follow

The Bank of England raised its key interest rate by a quarter point to four percent. It is the first increase since 2023. Eight of the nine members of the Monetary Policy Committee voted for the move, and Catherine Mann wanted a larger rise of half a point. The Bank said rising energy prices from the Middle East conflict are pushing inflation up again.

UK consumer price inflation was three and a half percent in September. The Bank now expects it to reach about five percent by the middle of 2027 before it falls back. Oil futures averaged about 108 dollars a barrel in late October, well above the Bank's summer assumptions. The committee said policy is not on a pre-set path, but markets read the statement as a signal that another rise is possible. It has seen little evidence so far that higher energy costs are feeding into wages, and it will watch next year's pay round closely. The next decision is due on 17 December.