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Bank of England Raises Interest Rates to 4% in Unanimous Vote
Bank of England raises interest rates to 4% in unanimous vote, its first rise in three years
Key points
- All nine Monetary Policy Committee members voted for the rate increase, the first unanimous vote since August 2023.
- Economists had expected a seven-two split, with those not voting for a rise assumed to back a hold.
- 68% of businesses in the Bank's October Decision Maker Panel said energy shocks were behind their plans to raise prices.
Why it matters. Tracker mortgage payments will rise immediately and variable-rate borrowers will face higher costs, which will weigh on business investment and firms' profits.
The Bank of England raised its benchmark rate to 4% from 3.75% on Friday, with all nine Monetary Policy Committee members voting for the increase. Eight of them backed the move, while Catherine Mann pushed for a larger rise to 4.25%. The decision followed CPI inflation climbing to 3.5% in September from 3.1% in August, driven mainly by fuel prices. The Bank's own forecast, released the same day, sees inflation rising to as much as 5% by mid-2027.
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Bank of England Raises Interest Rates to 4% in Unanimous Vote
The Bank of England raised its base interest rate to 4 per cent after a unanimous decision by its Monetary Policy Committee. Policymakers cited serious concerns over persistent inflation as the reason for the increase. The move tightens borrowing costs for households and businesses across the United Kingdom. Commentary in the Cityam newspaper argued that the rise is justified but criticised attributing inflation pressures to Iran. The decision marks an effort to bring inflation back toward the central bank's target. Further rate decisions and inflation data will determine the path of monetary policy in the months ahead.
City AM Shadow MPC urges Bank of England to hike interest rates
Banks are being forced to compete harder for customers, as the housing market remains sluggish and higher rates put people off moving home.
Sources
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