5 November 2026
If you are covering the Bank of England's decision to raise interest rates to 4%, please find below a comment from Kit Rees, investment strategist at Quilter:
"The Bank of England’s decision to raise interest rates to 4% from 3.75%, its first hike since 2023, doesn’t come as a surprise as the central bank joins its peers in its battle to get inflation down to target with a definitive 8-1 majority in the vote backing the move.
"The conflict in the Middle East has seen the price of Brent crude surge by nearly 60% this year, feeding through into higher petrol and energy prices. This has resulted in higher costs for UK households and businesses alike. The BoE doesn’t yet see evidence that this is feeding into other prices and wages, but in reality, that is only a matter of time and thus why they feel the need to act now.
"So far, the Bank of England has been able to largely look through the impact due to an absence of so-called second-round effects of inflation. It will be hoping the results from the US midterms may help dampen the impact of the war in the Middle East and allow inflationary pressures to ease, especially given the rhetoric coming out of the US administration in light of Tuesday’s results. That said, those pressures are still expected to bite, with the central bank predicting UK CPI will reach 5% by the middle of next year, far higher than was previously forecast.
"Tightening financial conditions means that it becomes more expensive for Britons to borrow, even as the interest rates on savings accounts could increase. With those rolling off fixed rate mortgages into an entirely different interest rate environment to five years ago, you can see how demand and consumption can be hit. Overall, it shows that the outlook for the UK economy could become more difficult unless we see a meaningful truce in the Middle East."
