The Bank of England raised interest rates to 4% to combat rising inflation, with one dissenter pushing for a 4.25% hike amid concerns over energy-driven price pressures.
The MPC voted 8-1 to raise Bank Rate by 0.25 percentage points to 4% on 4 November 2026, with one member preferring 0.5 points to 4.25%. A hike delivered with a dissent in favour of an even larger move supports sterling, especially with UK CPI at 3.5% in September and expected to reach around 5% by mid-2027. The Committee's insistence that policy is 'not on a pre-set path' limits how far the currency can rally.
The Committee judged that inflationary pressure in the pipeline was sufficient to warrant a hike, with CPI at 3.5% in September and expected to rise to around 5% by mid-2027, driven by higher energy prices.
The article says monetary policy is not on a pre-set path and the Committee will assess the evidence at each meeting.
A 0.25 percentage point increase in Bank Rate to 4%, backed by 8 of 9 MPC members and one call for 4.25%, pushes short-dated gilt yields up and lifts the whole curve. The expectation that CPI inflation reaches around 5% by mid-2027 keeps upward pressure on yields, though the statement that policy is not on a pre-set path caps the move.
Higher Bank Rate raises the yield on short-dated gilts and tends to pull the 10-year yield higher as well, given inflation is expected to reach around 5% in 2027 Q2.
A rate rise to 4% raises borrowing costs and weighs on domestically focused UK equities, but the article also notes UK activity data have been stronger than expected and that energy prices are 38% (Brent at $108 per barrel) and 81% (gas at 216 pence per therm) above July Report levels, which supports the energy-heavy index. The two forces largely offset each other.
The article cites stronger-than-expected UK activity and sharply higher energy prices alongside the hike, so support for the index's energy constituents partly offsets the drag from tighter monetary policy.
The Bank of England’s Monetary Policy Committee voted 8-1 to raise the Bank Rate by 25 basis points to 4% on November 4, 2026. Policymakers cited persistent inflationary pressures, with CPI expected to reach 5% by mid-2027, though they emphasized that future policy remains data-dependent rather than on a pre-set path.
The Committee determined that inflationary pressure in the pipeline was sufficient to warrant a hike, with CPI at 3.5% in September and expected to rise to around 5% by mid-2027, largely driven by elevated energy prices.
The Bank stated that monetary policy is not on a pre-set path and the Committee will continue to assess economic evidence, including wage growth and pricing behavior, at each subsequent meeting.