EL7 Research · Central Banks
6 November 2026 · After Thursday’s 5 November decision · Prices through the 5 November close
The Bank of England raised rates by 25 basis points in its first increase since August 2023, with the sole dissenter calling for a larger rise. We read all nine members’ explanations in the minutes to identify who sees another hike soon and who regards this as a single precautionary step, and measured sterling and equity moves in the minutes after the announcement to establish what will determine the next decision.
The hike has arrived; the disagreement has shifted to what follows. The Bank of England’s Monetary Policy Committee (MPC) (Bank of England) has nine members and sets UK interest rates. On Thursday 5 November, the committee raised Bank Rate, the Bank’s official interest rate, by 25 basis points from 3.75% to 4%. A basis point is one hundredth of a percentage point. This was the first increase since August 2023. But the more important figure was the vote: eight members backed a 25 basis point rise, while the ninth, Catherine L Mann, voted against the decision because she wanted a larger increase of 50 basis points to 4.25%. None of the nine therefore voted to hold, after six had voted to hold in September.
Behind the near-unanimous vote lie three views of the next step. Each member explains their vote in the minutes, the written record of the meeting’s deliberations. Four of the eight wrote that another increase was likely or warranted unless news eased the risks. Including Mann, that makes five, the majority needed for any decision. Two members said each meeting’s decision would depend on the evidence available at the time. Two described the move as an insurance hike, a precautionary increase against a risk yet to materialise, rather than the start of a tightening cycle.
The reason: inflation heading towards 5%. The central projection, the baseline forecast in the new quarterly Monetary Policy Report, shows inflation peaking at 4.9% in Q2 2027, up from 3.5% in September. In the adverse scenario, the worse scenario in the Bank’s report, it reaches 6.2%. Energy prices drive this increase: Brent crude, an oil benchmark, averaged 108 dollars a barrel over the fifteen days used to construct the forecasts, before falling to around 95 dollars early in the week.
Markets read the decision as signalling further rate increases, before the effect faded. Sterling rose 0.22% against the dollar in the minutes after the announcement, then ended the session near its previous level. The yield on two-year gilts, debt issued by the UK government, rose around 3 basis points to 4.77%, and markets increased their pricing of further rate rises through end-2027 to around 76 basis points from 67 before the decision, according to Reuters. The afternoon decline in the FTSE 100, however, coincided with the opening of Wall Street, rather than the decision.
Our assessment: The decision makes a second rate increase likely as long as energy prices remain near current levels, with the deciding votes held by the middle camp, which ties each step to the data. The two key dates are the October inflation release on 18 November and the 4 February 2027 meeting, accompanied by the next quarterly report.
A free account gives you 4 full research papers every month. Or subscribe to EL7 Pro for full access to more than 300 papers.
$700 per year · or $99 per month