Bank of England Hikes Interest Rates by 25bps to Start Tightening Cycle
Key Facts
The Bank of England initiated a tightening cycle by raising interest rates by 25 basis points. This move follows statements from Governor Andrew Bailey, who had established a case for higher borrowing costs should the conflict in Iran persist and impact the inflation outlook.
The decision to hike follows Deputy Governor Ramsden's observations of a stall in services inflation cooling. The rate increase comes after the BoE had previously held rates at 4% on November 5, 2026, the same day the Construction PMI missed forecasts by falling to 43.6 points.
Governor Andrew Bailey is set to deliver a speech on November 9, 2026, to provide further clarity on the tightening path ahead of the BRC Retail Sales Monitor release on November 10, 2026.
Latest Updates · 3
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Update: Governor Andrew Bailey stated on November 5, 2026, that a second interest rate hike becomes more probable if oil prices remain elevated. The Bank is now linking the future tightening path to energy market stability and its subsequent impact on inflation.
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Update: Governor Andrew Bailey warned that inflation risks are currently tilted to the upside. He noted that the Bank of England is closely monitoring the extent of inflation pass-through across the economy.
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Update: Governor Andrew Bailey defended the central bank's policy timeline, stating on November 5, 2026, that he does not believe the BoE moved too late in its actions. These remarks come as a direct response to criticisms regarding the timing of the bank's response to economic pressures.