Just now, the Bank of England raised its base interest rate to 4%, the first hike in over three years—and the move proved more hawkish than expected!

Follow Property News to see what major and minor developments occurred today: ・ The Bank of England raised its base interest rate to 4%, marking its first rate hike in over three years. ・ Asking rents in London rose 7.6% year-on-year in October—the sixth consecutive month of increases following the implementation of new legislation. ・ Global high-net-worth individuals are returning to London’s luxury property market, with buyers from the U.S. and the Middle East leading the trend. ・ Over 80% of landlords plan to raise rents; one-third also intend to purchase additional properties. ・ Rightmove faces a £1.5 billion class-action lawsuit; the tribunal has suspended its ruling. 1. Bank of England raises base rate to 4%—first hike in over three years Just now, the Bank of England announced a 0.25 percentage point increase, lifting the base rate from 3.75% to 4%. This is the UK’s first rate hike in over three years. The UK’s interest rate had remained unchanged at 3.75% since December 2025. 1) Vote more hawkish than anticipated The Monetary Policy Committee’s vote stood at 8–1. Eight members supported a 0.25 percentage point hike. The sole dissenting vote came from Catherine Mann, who argued the move was insufficient and advocated a 0.5 percentage point increase instead. Markets had originally expected a 7–2 split. Once the result was announced, it became clear that internal sentiment at the Bank had shifted markedly. In fact, early signals had already emerged. Since December 2025, the UK’s interest rate had held steady at 3.75% for six consecutive meetings. At the September meeting, however, Megan Greene, Catherine Mann, and Huw Pill had already voted in favour of a rate hike. 2) Inflation is the main driver The primary catalyst behind this policy shift is inflation. The UK’s August inflation rate stood at 3.1%; in September, it jumped to 3.5%, exceeding market expectations. Rising fuel prices were the chief cause: in September, petrol reached £1.695 per litre and diesel £1.925 per litre. The root cause lies in energy markets. Geopolitical tensions in the Middle East have pushed up oil and gas prices. The Bank of England disclosed that, over the three weeks ending late October, Brent crude averaged approximately $108 per barrel—up 38% from July’s level. What’s even more concerning is what lies ahead. According to the Bank’s latest forecast, inflation could rise to around 4.5% in Q1 next year and approach 5% in Q2—drifting further away from the 2% target. 3) Will this be the last hike? Governor Andrew Bailey stated that the rationale for raising rates is now compelling. He also noted that if the Middle East conflict fails to ease meaningfully, he would understand the necessity of another hike. Chief Economist Huw Pill spoke even more directly, saying a single hike is likely insufficient. Megan Greene likewise believes further hikes will be needed. Alan Taylor, by contrast, adopted a more cautious stance, describing this move as a “precautionary” hike—leaving open the possibility that the next step could go either way. A Reuters survey conducted in October found that most economists had already anticipated a November hike. Of the 61 respondents, 30 expected another hike in Q1 next year. The next monetary policy meeting is scheduled for 17 December. 4) Mortgage rates had already risen earlier For homeowners and buyers, mortgage rate increases have already taken effect. Since early September, major banks including HSBC and NatWest have successively raised their mortgage rates. Data from Moneyfacts shows that the average interest rate on new UK mortgages has climbed to 5.89%.

The Bank of England resumes rate hikes: base rate rises to 4%! Inflationary pressures are re-emerging.

On 5 November 2026, local time, the Bank of England announced it would raise its base interest rate by 25 basis points—from 3.75% to 4.00%—in line with broad market expectations. This marks the Bank’s first rate hike since August 2023, signalling a pivotal shift in its monetary policy after over three years of holding rates steady. Judging from the policy statement and the Governor’s remarks, this hike was not triggered by a sudden overheating of domestic demand, but rather by renewed upward pressure on inflation stemming from the Middle East conflict pushing up global energy prices. Markets had largely priced in this hike, so what truly warrants attention is the voting breakdown, the tone of the policy language, and the guidance offered on future policy paths. The voting outcome leaned hawkish, reflecting strong internal consensus The Bank’s Monetary Policy Committee approved the decision by an 8–1 vote. The sole dissenter advocated a larger 50-basis-point hike, which would have lifted the rate directly to 4.25%. This outcome proved more hawkish than markets had anticipated, indicating a relatively high degree of consensus among committee members on tightening monetary policy. From the voting pattern, the disagreement was not about *whether* to hike—but about *how much*. With eight votes for a 25-basis-point increase and one for a 50-basis-point increase, no member voted to hold rates steady, nor did any oppose the tightening direction altogether. This pattern—‘consensus on direction, divergence on magnitude’—is typically interpreted as a hawkish signal: it suggests policymakers have converged in their assessment of inflation risks, differing only on the pace of tightening. For markets, such nuance often carries greater weight than the hike itself when pricing the next meeting. Middle East conflict pushes up energy prices, reigniting inflationary pressures The Bank explicitly identified the ongoing Middle East geopolitical conflict as the core trigger for this hike. The conflict has driven global energy prices higher still, despite already elevated levels, exerting direct upward pressure on UK inflation. The UK’s consumer price index rose 3.5% year-on-year in September—up from 3.1% in August. The Bank forecasts inflation could climb further to around 5% by mid-2027. The UK’s sensitivity to energy-price transmission stems from its high exposure to international markets for electricity and natural gas—meaning energy costs quickly feed into household bills and business expenses. Meanwhile, the rebound in inflation—from 3.1% to 3.5%—indicates that the prior gradual downward trend has been interrupted. By hiking now, the Bank is essentially acting pre-emptively—tightening policy before inflation expectations spiral out of control—to prevent the energy shock from triggering a second-round effect via wages and pricing behaviour. The statement also stressed that monetary policy must bring inflation back to the 2% target over the medium term—not mechanically react to single-month data. Bailey: Unless the Iran war ends, rate hikes may not stop In his post-decision remarks, Bank of England Governor Andrew Bailey left room for further tightening in the policy path ahead. He stated that if the Middle East conflict fails to achieve substantive progress, energy prices and inflation will continue facing upside risks—making “further rate hikes reasonable.” Bailey added that this hike “should not be viewed as the start of a prolonged series of increases,” yet “unless the Iran war is resolved, it is unlikely to be the last.”

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