Bank of England set to hike interest rates to 4 to tackle rising inflation

The Bank of England is widely expected to raise interest rates for the first time in more than three years, tightening monetary policy to address rising UK inflation. Traders predict a hike to 4% from 3.75% when the Monetary Policy Committee meets Thursday. It would mark the first increase since August 2023 and could pressure mortgage holders. Economists point to CPI inflation reaching 3.5% in September, the highest in 11 months, driven in part by higher petrol and diesel prices, with Middle East conflict contributing to energy costs away from the 2% target. Ofgem’s energy price cap rose 3.6% for a typical household on October 1, with forecasts of a further 22% jump in January. The MPC will also consider weaker signals like unemployment at 4.7% and modest August growth of 0.1%, alongside market expectations of further hikes into 2027.