The Bank of England raised its rate to 4%

The Bank of England raised its key interest rate from 3.75% to 4%. This is the first increase in more than three years. The decision was supported by eight of the nine members.

The bank expects inflation to rise to 4.8% in the second quarter of next year. The main reasons are higher energy prices and the prolonged US-Iran war. If oil prices rise to around $130 per barrel, inflation could reach as high as 6.2% in the third quarter of 2027.

According to Bank of England Governor Andrew Bailey, this decision does not mean the rate will necessarily be raised several more times, though if the war in the Middle East continues, another increase is possible.

The bank expects inflation to return to the 2% target only in the third quarter of 2028.

Source: Reuters