Bank of England Raises Interest Rates for First Time in Over Three Years, Benchmark Rate Reaches 4%

The Bank of England's Monetary Policy Committee voted 8-1 to raise the benchmark interest rate by 25 basis points to 4%, the first hike since August 2023. The BoE forecasts UK inflation will peak near 5% in the second quarter of 2027 and return to the 2% target by the third quarter of 2028, with a possible peak above 6% if oil prices surge. Growth forecasts for 2026 and 2027 were raised to 1.6% and 1.3%, supported by AI industry investment and fiscal stimulus.