Bank of England decides today: hike to 4% expected
In short
- The Bank of England announces its rate decision today at 12:00 London time (14:00 in Sofia). A quarter-point rise from 3.75% to 4% is expected.
- UK inflation was 3.5% in September, up from 3.1% in August, with motor fuel almost 30% dearer than a year ago.
- In a mid-October Reuters poll, 54 of 63 economists expected a rise. In September, three of the nine rate-setters already voted for one.
The Bank of England decides today at 12:00 London time (14:00 in Sofia), and the expectation is clear: a quarter-point rise in Bank Rate from 3.75% to 4%. If it happens, it will be the first rise in three years, Reuters reports.
What happened
Bank Rate has been 3.75% since December 2025. At the September meeting the Bank held it in a 6–3 vote, with three members voting for a rise. Goldman Sachs expects 7–2 in favour of a rise today; some forecasters see a narrower margin (investingLive).
Consumer price inflation rose to 3.5% in September from 3.1% in August. Motor fuel is up almost 30% on the year, core inflation is 2.8% and services inflation is approaching 4%. Brent has been well above $100 a barrel in recent weeks; on Wednesday US crude fell more than 8% to $88.12.
Markets already price a rise to 4% almost in full, plus several more in 2027. Economists are more cautious: Goldman sees inflation peaking above 4% in the first half of 2027, and many expect one more quarter-point rise to 4.25%, possibly in February. MUFG expects both. The Bank will also publish a new Monetary Policy Report with inflation and growth forecasts.
European stocks closed higher on Wednesday (HawkValue data at the close): FTSE 100 at 10,829 (+1.8%), DAX at 26,438 (+2.2%) and Euro Stoxx 50 at 6,266 (+2.0%). At 06:22 a.m. £1 was worth $1.35.
What it means for you
The maths: on a £200,000 tracker mortgage, a quarter-point rise adds £500 a year in interest, about £42 a month before capital repayments. At $1.35 to the pound, that is roughly $675 a year. If you hold £1,000, it is worth about $1,350 at that rate.
UK lenders have already lifted fixed rates: the average two-year and five-year deals were about 5.93% and 5.94% at the start of October, from about 5.6% a month earlier (Beaver Business). Tracker and variable-rate mortgages would rise almost at once. At 12:00 London time, watch three things: whether Bank Rate is 4%, the vote split, and what the Bank says about early 2027.
See also: stock prices and gold prices in $.
Bottom line
A rise to 4% is what the market expects, and the decision is not yet made. The vote split and the inflation forecast for 2027 will matter more than the quarter-point itself.
Sources: HawkValue data (rates at 06:22 a.m.; stocks at Wednesday’s close)
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