Bank of England hikes rates to 4% as inflation fears mount

The Bank of England raised interest rates to 4% on November 5, its first hike in more than three years, with policymakers warning that more tightening may be needed as the US-Iran conflict lifts energy costs and threatens the UK inflation outlook. The Monetary Policy Committee voted 8-1 for a quarter-point increase from 3.75%, while Catherine Mann dissented, arguing for a half-point to 4.25%. The bank forecasts inflation around 5% by mid-next year, well above its 2% target, and said months of higher prices create enough future pressure to act now. Markets priced in three further quarter-point rises during 2027.