Bank of England raises its rate to 4% as energy inflation builds
Eight policymakers back a quarter-point increase, with one seeking a larger move.
The Bank of England raised Bank Rate by a quarter of a percentage point to 4% Thursday, its first increase in more than three years, as policymakers warned that higher energy costs could spread through the economy.
The vote was 8-1. Eight members backed the quarter-point increase from 3.75%, while Catherine Mann preferred a half-point rise to 4.25%.
UK consumer-price inflation reached 3.5% in September, above the bank's 2% target. The central bank expects it to approach 5% by the middle of 2027 as energy costs feed into household bills and business prices.
Policymakers said evidence of knock-on effects on other prices and wages remained limited. But the scale and duration of the energy shock, together with stronger-than-expected activity, were enough to justify tighter policy now.
The bank did not commit to a sequence of increases. Governor Andrew Bailey said further decisions would depend in part on the Middle East conflict and the way energy costs affect wages and prices.
The distinction is between today's decision and the path ahead: Bank Rate is now 4%, while the inflation forecast and any further increase remain conditional. A change in oil prices over a few trading sessions does not by itself settle that outlook.
