Bank of England raises rates to 4% in first hike in three years

· Economy · United Kingdom

The Bank of England raised interest rates to 4% from 3.75% on Thursday, its first increase in more than three years, and signalled another rise in the near future to combat rising inflation. One policymaker voted to raise the key rate to 4.25%. The Bank warned inflation will approach 5%. Governor Andrew Bailey's move comes amid a cost of living crisis, with critics saying many households will find the decision hard to accept. The BBC's economics editor expects one more rate rise but thinks that will be the last. Higher rates affect jobs, loans and savings, and the pound rose to its highest level against a basket of currencies since the Brexit referendum a decade ago.

Why it matters：It is one of the first major central banks to tighten again, a signal that the inflation shock tied to the Middle East war is reshaping monetary policy worldwide.

Key points

  • The base rate rose from 3.75% to 4%, the first hike in over three years.
  • The Bank warned inflation will near 5% and signalled another rise.
  • Sterling reached its highest level against a currency basket since the Brexit referendum.

Sources (original reporting)

More stories from this day