UK Bank Rate rises to 4.00% on 5 November 2026, first hike in over three years

The Bank signalled that rates could rise again

Bank Rate is the Bank of England's main policy interest rate. It steers borrowing costs across the UK economy. The rate rose by 25 basis points (hundredths of a percentage point). It had been 3.75% throughout the data back to January 2026. The increase followed a fuel-driven jump in inflation in October. The Bank's Monetary Policy Committee (MPC), which sets the rate, forecast inflation close to 5% next year. Governor Bailey would not rule out a second increase while the Middle East conflict lasts.

UK government bond yields fell before the decision

Gilts are UK government bonds. Their yields show what the government pays to borrow. Bond and currency data run only to 3 or 4 November, so they do not yet show how markets reacted to the decision.

• 10-year nominal par yield: 5.21% on 3 November, down from 5.37–5.38% in mid-October. It touched 5.17% on 2 November, after a low-key budget.
• 5-year: 4.86%, from 4.97%.
• 20-year: 5.52%, from 5.72%.

The pound was firm against the dollar

The pound traded at 1.3471 US dollars ($1.3471) on 4 November, up from $1.3415 the day before. The dollar sold off after the US midterm elections. The pound was also at €1.1991 and ¥213.44. The sterling effective exchange rate index measures the pound against a basket of trading partners' currencies. It rose to 86.54, the highest reading in the last month of data and up from 85.39 in mid-October.

The overnight market rate still reflects the old Bank Rate

The Sterling Overnight Index Average (SONIA) is the average interest rate banks pay to borrow pounds overnight. It was 3.7342% on 3 November, in line with the old 3.75% Bank Rate. It should move up toward 4% in the next readings.