At its meeting ending on 4 November 2026, the Monetary Policy Committee (MPC) voted by a majority of 8–1 to increase the Bank Rate by 0.25 percentage points, bringing the rate to 4 percent. One member favoured a larger rise of 0.5 percentage points to 4.25 percent.
The Committee highlighted that CPI inflation rose from 2.6 percent in June to 3.5 percent in September, a jump largely driven by higher household electricity, gas and motor‐fuel prices.
Global energy prices have surged since July, with diesel and petrol pump prices about 40 percent and 30 percent higher, respectively, than before the Middle‐East conflict. These direct energy effects accounted for roughly 60 percent of the CPI overshoot above the 2 percent target in September.
While the energy impact is clear, the report finds limited evidence of broader “second‐round” effects on other goods, services or wages. However, recent resilience in economic activity and the labour market raises the risk that higher energy costs could spill over into wider price and wage pressures.
The MPC projects CPI inflation to peak around 5 percent in the middle of 2027 before gradually falling back toward the 2 percent target as energy‐price pressures ease and restrictive monetary policy takes effect.
The Committee stressed that monetary policy is not on a preset path; future adjustments to Bank Rate will depend on how inflationary pressures evolve, including any emerging wage‐price dynamics.
The report also outlines alternative scenarios—a adverse inflation path with higher energy prices and stronger second‐round effects, and a weaker‐demand path with limited spill‐overs—illustrating the range of possible policy responses.