The Bank of England, by a majority vote of 8-1, decided on monetary policy and raised interest rates by 25 basis points to 4%, the first increase since August 2023, as expected, at its meeting earlier today, Thursday, November 5th. One member had favored a 50 basis point increase.

The Bank’s interest rate report stated that the ongoing conflict in the Middle East has contributed to higher oil prices since the previous meeting, and inflation rose to 3.5% in September. It is expected to rise to 5% by the middle of next year before declining as the impact of energy prices fades. Monetary policy is being designed to ensure inflation falls sustainably to 2%.

Monetary policy is not on a predetermined path, and the committee will continue to assess the evidence at each meeting and the potential impact of higher energy prices on other prices. The committee will adjust interest rates as necessary to ensure inflation reaches the target of 2% over the medium term.