The Bank of England is expected to raise its benchmark interest rate on Thursday, according to the BBC. Most analysts predict a rise from 3.75% to 4%. It would be the first increase in more than three years. The Bank last raised rates in August 2023.
The Bank rate has fallen from its 2023-24 peak of 5.25%. The Monetary Policy Committee has held the rate steady at its last six meetings.
Analysts attribute the expected rise to inflation. The Consumer Prices Index measure was 3.5% in the year to September 2026, up from 3.1% the previous month and well above the Bank's 2% target. The report says the increase is driven primarily by petrol and diesel costs, and it links the energy and fuel pressure to the ongoing Iran war.
The Bank will announce its decision at 12:00 GMT. Chris Cheverall, head of UK at CMC Markets, said the Bank must balance inflation that is still too high against an economy whose growth outlook has weakened sharply.
According to UK Finance, a 0.25 percentage point rise would add about £31 a month to repayments for a typical tracker mortgage. For a typical variable-rate mortgage, the increase would be about £14 a month, though lenders would decide when to pass it on. Borrowers on fixed deals would not see an immediate change, but lenders have already priced in the expected rise. Savers could see better interest rates on their accounts.