Bank of England raises rates to 4% in first hike since 2023
The Bank of England raised interest rates to 4% from 3.75%, its first increase in more than three years, and forecast inflation would reach 4.9% by mid-2027.
The Bank of England raised its main interest rate to 4.00% from 3.75%, its first increase in more than three years.
Eight of the nine Monetary Policy Committee members voted for the increase, while Catherine Mann favoured a 50 basis point rise.
The bank expects UK inflation to reach 4.9% by mid-2027, against a previous forecast of 3.2%, driven by energy costs resulting from the war with Iran.
Governor Andrew Bailey indicated that another increase was likely unless the conflict in the Middle East is resolved.
What do these terms mean?
Main interest rate: The rate set by the central bank that affects the cost of borrowing and lending in the economy.
Monetary Policy Committee: The committee responsible for interest rate decisions at the central bank, whose members vote on each decision.
Basis point: A small unit for measuring changes in interest rates; 100 basis points equal one percent.
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