Bank of England Raises Rates to 4% as Fed Holds, Citing Worse UK Inflation Outlook

The Bank of England raised its main interest rate by a quarter point to 4% on November 5, its first hike since 2023, with the Monetary Policy Committee voting 8-1. The Federal Reserve held rates the previous week, saying it needed more information. US consumer prices rose 3.7% year-on-year to September, above Britain's 3.5%, but the BoE forecasts UK inflation near 5% by mid-2027, or 6.2% if energy stays expensive. British rates now stand at 4% against the US target range of 3.75% to 4%. The pound traded near $1.3468 and two-year gilt yields rose to 4.77%, while traders price about three more UK hikes by end-2027.