Live: Bank of England raises interest rates
Good news for annuity rates
Kalpana Fitzpatrick
Today’s rate hike is no surprise and it has been a tough balancing act for the Bank of England. It will add pressure to household budgets, particularly those on tracker mortgages for example, but inflation is hurting households too.
With energy prices still volatile thanks to the ongoing Middle East conflict, inflation is not slowing down and is expected to average at around 3.5% next year.
Whether this is the start of a rate hike cycle remains to be seen, but there are some positives to consider for cash savers, who may find some better rates on their cash.
Though, most banks have already priced in the increase in their offerings so you may not see any uplift following today’s decision.
There is also positive news for those who are about to retire, with potentially higher annuity rates. You should seek advice and shop around, though as other market conditions also impact annuity prices. Once a decision on an annuity is made, it is irreversible.
November hike signals “sizeable shift” in direction
Let’s bring you some reaction to the latest Monetary Policy Committee (MPC) decision, which was in line with economists’ expectations.
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales (ICAEW), said today’s rise signalled a “sizeable shift” in direction from the MPC.
He said the strong backing for the hike and tone of the MPC report’s minutes suggested further increases are “probable”.
“The path for interest rates is hanging in the balance, with US-Iran hostilities holding the key,” Thiru said. “Unless energy prices start to retreat, further rate hikes will move from a risk to a real prospect.
“With the Bank forecasting inflation to climb further in the months ahead, policymakers are likely to remain on high alert to mounting price pressures, leaving a February rate rise looking increasingly likely.”
What the base rate hike means for savers
Jessica Sheldon
The base rate hike should mean interest rates offered on savings accounts go up, although it could take some time for higher rates to feed through.
While higher headline savings rates are attractive, the tax rate on savings interest will be hiked by four percentage points from April 2027.
This means savers who exceed their savings allowances – such as the personal savings allowance – face paying more tax on interest they earn from savings. It makes tax-efficient products, such as ISAs, even more important. You can put £20,000 a year into ISAs and any interest or investment returns you make on the money held in them is tax-free.
While cash ISAs may offer slightly lower interest rates than traditional savings accounts, it could be worth the trade-off when you factor in tax on savings interest.
What the BoE’s interest rate hike means for investors
Dan McEvoy
Given today’s 25 basis point hike was widely-expected, there has been little immediate reaction in the stock market or the bond market, as investors had priced the decision in already. The FTSE 100 is around 0.6% higher than yesterday’s close. Gilt yields rose slightly following the announcement, but are little-changed in comparison to their declines over recent days.
Looking ahead though, higher interest rates are a headwind for businesses that face higher borrowing costs, and potentially restricted demand. This could have an especially marked impact on smaller UK companies, as these tend to be more sensitive to changes in the domestic economy.
Inflation forecast to hit 5% by mid-2027
CPI inflation rose to 3.5% in the 12 months to September 2026, however the Monetary Policy Committee is forecasting it to rise to 5% by midway through 2027.
It expects this to be mainly due to higher energy prices which will have a knock-on effect on businesses who could in turn raise their prices to cover costs.
It said there was so far “little evidence” of significant knock-on effects beyond energy prices, but that energy costs have been high for long enough now that they will eventually kick in.
Andrew Bailey: “Inflationary pressure” enough to justify interest rate rise
The governor of the Bank of England, Andrew Bailey, said a bank rate increase today was warranted with “enough inflationary pressure in the pipeline” caused by rising energy prices.
He added: “Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes.
“But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase. The MPC will judge the outlook at each meeting, responding as necessary to bring inflation sustainably back to our 2% target.”
How did the Monetary Policy Committee members vote?
Members of the MPC voted by eight to one to raise interest rates to 4%.
Eight members voted for a 0.25 percentage rise to 4%. One member voted for a steeper 0.5 percentage point rise.
BREAKING: BANK OF ENGLAND RAISES INTEREST RATES TO 4%
Base rate decision imminent
The Bank of England’s Monetary Policy Committee is due to confirm its latest base rate decision in a matter of minutes
Stay with us and we’ll bring you the decision as soon as it’s announced.
What do people think the Bank of England should do today?
Thanks to everyone who voted on our poll about the MPC’s decision today. The results are in.
More than 400 of you voted, with 31% saying the committee should hold rates at 3.75%. Meanwhile 30% believe now is the right time to raise rates while 26% agreed rates should be raised and such a decision was overdue.
Almost 10% who voted said the committee should cut rates today.
What is happening to inflation?
Part of the reason the Bank of England’s Monetary Policy Committee is expected to hike interest rates today is due to rising inflation. The committee’s job is to try and keep inflation at or around 2% without stifling economic growth, and adjusting interest rates is the key lever it uses to achieve this.
In the 12 months to September, Consumer Prices Index (CPI) inflation rose by 3.5%. This was up from 3.1% in the year to August and 2.9% in the year to July.
Inflation has been stoked mainly by rising fuel prices as a consequence of conflict in the Middle East. Airfares, computer games and live events also added upward pressure in September, according to the Office for National Statistics.
Mortgage rates hit three-year high
Mortgage rates have hit record highs as lenders price in higher interest rates.
According to financial data firm Moneyfacts, the average new mortgage rate has risen to 5.89%, up from 5.83% at the start of October and the highest it’s been since November 2023 (6.07%).
Fixed-rate mortgage rates in particular have surged over the last 12 months. Moneyfacts said the average two-year fix was 4.94% in November 2025, but is now 5.97% as of November 2026. Meanwhile the average five-year fix has gone up from 5.01% to 6% over the same window.
Rachel Springall, finance expert at Moneyfacts, said mortgage rates had risen as lenders try to re-adjust amid swap rate volatility. Swap rates reflect the wholesale cost of borrowing for lenders so any rise or fall is generally reflected in fixed-rate mortgages.
“Major lenders expect an imminent rise to the Bank of England Base Rate (BBR),” said Springall. “Their lowest rates are now priced 0.44% higher than they were at the start of September. Lenders could well pivot away from making aggressive rises over the coming weeks, but most of the damage is unlikely to unwind entirely.”
What have economists said about interest rates?
The Monetary Policy Committee is expected to announce a hike to base rate today.
Robert Wood, chief UK economist at economic research firm Pantheon Macroeconomics, said a 0.25 percentage point rise to 4% is “nailed on” and he expects an eight-to-one vote in favour.
He said strong economic growth and elevated gas prices would give the Monetary Policy Committee cause to raise interest rates.
According to the Office for National Statistics (ONS), GDP grew by 0.5% between April and June 2026 following 0.6% growth between January and March 2026.
Meanwhile, the price of crude oil has risen from around $70 a barrel before the conflict in the Middle East to $96 a barrel as of 5 November.
Alexander Harvey, economist at advisory firm Oxford Economics, also believes the Bank of England will hike interest rates today. The firm is forecasting a 0.25 percentage rise to 4% and a further 0.25 percentage point rise to 4.25% in February 2027.
What can we expect from the Bank of England today?
The Bank of England’s Monetary Policy Committee (MPC) announces interest rate decisions eight times a year. Four of those times it produces a detailed report laying out its inflation projections and the state of the economy.
These reports detail how any significant macroeconomic factors – such as the conflict in the Middle East – could impact UK inflation and growth in the near future.
The Bank will publish one of these reports alongside its interest rate decision today. It’s worth paying attention to as it will likely explain the MPC’s thinking as to whether inflation and interest rates could rise or go down over the coming months.
What is the current UK base rate?
The Bank of England base rate is currently at 3.75%, having last changed in December 2025, when interest rates were cut from 4%.
Expectations at the start of 2026 had been that the base rate would gradually fall over the course of the year, but that was before the conflict in the Middle East emerged.
Since the US and Israel launched airstrikes on Iran at the end of February, the Bank of England has remained steady and not raised interest rates, but with inflation creeping up, economists from Oxford Economics and Pantheon Macroeconomics believe a hike is on the cards today.
Good morning and welcome to our live coverage of the latest base rate decision. Stay with us as we bring you a preview ahead of the announcement at 12pm and reaction and analysis after the decision is confirmed.
