Current Bank Rate 4%
Next due: 17 December 2026
Current inflation rate 3.5%
Target: 2%
Energy prices have stayed high and volatile due to conflict in the Middle East
Inflation is expected to reach about 5% by mid-2027
We’ve raised Bank Rate to reduce how much rising energy costs affect other prices
Published on 5 November 2026
The Monetary Policy Committee is responsible for maintaining monetary stability by keeping inflation low and stable. It meets eight times a year to decide what level of Bank Rate is needed to return inflation to – or keep it at – the 2% target over time.
Key points:
- we have raised Bank Rate by 0.25 percentage points to 4%
- conflict in the Middle East has disrupted the transportation and supply of energy, raising its price and pushing up households’ motor fuel costs and utility bills
- inflation has risen to 3.5% and we expect it to rise even further to about 5% by mid-2027 as higher energy prices have their knock-on effects; higher bills could force businesses to increase their prices to cover the cost, for example
- so far, there is little evidence of significant knock-on effects on other prices and wages; but energy costs have been high for long enough now that we expect those knock-on effects to eventually kick in
- the economy has been more resilient and activity has been stronger than expected – this is good news, but it adds to the risk that higher energy prices affect other prices; so, we must act now to reduce their impact
- raising Bank Rate should help limit how far higher energy costs feed into prices in the economy more generally
Find out more
Read the latest Monetary Policy Summary and Minutes
Read the latest Monetary Policy Report
Read our explainer on interest rates
There is now enough inflationary pressure in the pipeline caused by the rise in energy prices that an increase in Bank Rate is warranted.
Today’s increase shouldn’t be seen as the first in an inevitable long sequence of hikes. But, unless the conflict in the Middle East is resolved, neither does it seem likely to be the last increase. The MPC will judge the outlook at each meeting, responding as necessary to bring inflation sustainably back to our 2% target.
Andrew Bailey, Governor
What are interest rates?
Interest is what you pay for borrowing money and what banks pay you for saving money with them.
If you are borrowing money, the interest rate (or lending rate) is the amount you are charged for doing so. If you are a saver, the interest rate (or savings rate) tells you how much money will be paid into your account.
Both are expressed as a percentage of the total amount you have borrowed or saved.
So, if you borrowed £100 with a 1% lending rate, you’d have to pay £101 a year later. If you put £100 into a savings account with a 1% interest rate, you’d have £101 a year later.
What is Bank Rate?
It is the core interest rate in the UK and it is our job to set it.
It is the rate of interest we pay to commercial banks, building societies and financial institutions that hold money with us. It is also the rate we charge on loans we may make to them. It, therefore, affects their own lending and savings rates. For example, when we raise the Bank Rate, banks will usually increase how much they charge their customers on loans and the interest they offer on savings. And the reverse if we lower it.
Bank Rate over time
Official Bank Rate history data from 1694How do interest rates affect inflation?
Interest rates influence how much people spend, and that affects how shops and businesses set their prices.
Higher interest rates mean higher payments on many mortgages and loans, meaning people must spend more on them and less on other things. Saving becomes more attractive because the returns are higher and it becomes more expensive to take out a loan. These things all discourage consumers and businesses from spending.
When customers spend less, businesses are less willing or able to raise their prices. When prices don’t go up so quickly, inflation falls.
Lower interest rates can have the reverse effect. If payments on mortgages and loans go down, people will have more money to spend on other things. Savers will get a smaller return and, therefore, may feel less motivated to put their money away. It will be also cheaper for potential borrowers to take out a loan – and use that money to make big purchases.
All of these factors encourage spending. When people spend more, this means demand is high. And when demand is high, businesses often raise their prices, pushing up inflation.
Monetary Policy Committee announcements
This page was last updated 05 November 2026