🇬🇧The Bank of England unanimously raised its policy rate 25 basis points to 4%, its first increase since 2023.

The Bank of England increased Bank Rate from 3.75% to 4%, with all nine Monetary Policy Committee members voting for an increase. The reported consensus had anticipated seven votes for an increase and two for no change; the rate increase itself matched the reported forecast.

The bank said stronger-than-expected economic activity added to the case for tighter policy. It also said the risk of second-round effects from higher energy prices had increased since September, while noting that evidence of those effects remained limited.

The reported central forecast put inflation at approximately 5% around the middle of 2027, returning to 2% by the third quarter of 2028. These are projections, not realized inflation readings; the bank also raised its 2027 economic-growth forecast to 1.3% from 1.1%.

Guidance shifted toward assessing evidence at each meeting and adjusting Bank Rate as necessary. Despite unanimity on the immediate decision, members still disagreed about the economy’s spare capacity, while most judged monetary policy to remain restrictive.