Finance1 min read

Interest rates expected to rise for first time in over three years

By · Published by Everything Blog

In short

The Monetary Policy Committee is anticipated to lift the benchmark rate from 3.75% to 4% as inflation reached 3.5% in September 2026. This move comes as costly petrol, diesel, and energy keep consumer prices firmly above the desired 2% threshold. Borrowers on flexible home loans face instant repayment jumps, while lenders have already priced the shift into new fixed-rate packages.

Key points

  • The expected rate rise from 3.75% to 4% ends a run of six consecutive meetings with stead…: The expected rate rise from 3.75% to 4% ends a run of six consecutive meetings with steady rates.
  • Ongoing conflict involving Iran continues to drive up domestic fuel and energy expenses.: Ongoing conflict involving Iran continues to drive up domestic fuel and energy expenses.
  • Homeowners rolling off older fixed-rate deals will encounter substantially higher annual…: Homeowners rolling off older fixed-rate deals will encounter substantially higher annual loan repayments.

Sources checked by our analysis pipeline: 1

- Published

Policymakers at the Bank of England are expected to raise interest rates on Thursday in what would be the first increase to the benchmark rate for more than three years.

Most analysts are predicting an rise from 3.75% to 4% in a move that would increase the cost of borrowing for individuals and businesses, but boost savers.

The Bank rate has fallen from its 2023-24 peak of 5.25%, although the Bank's Monetary Policy Committee (MPC) has left the rate unchanged at its last six meetings.

Rising inflation, driven primarily by the cost of petrol and diesel, will push policymakers into an interest rate hike, analysts suggest.

The announcement will be made by the Bank at 12:00 GMT on Thursday.

Close attention will also be paid to any hints from the MPC on the future direction of interest rates.

"The decision is increasingly less about whether rates reach 4% and more about what follows after that," said Chris Cheverall, head of UK at trading platform CMC Markets.

"A quarter-point rise is already widely expected, but the Bank now has…

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