First UK rate rise in more than three years driven by Middle East conflict spike
The Bank of England raised its main rate by 0.25 percentage points to 4.0%, citing energy price pressures from the Iran war.
The Bank of England voted to lift rates from 3.75% to 4.0%, marking the first increase since August 2023. Energy costs have surged because of the US-Iran conflict and bottlenecks in the Strait of Hormuz, pushing inflation to a 11-month high of 3.5% in September, well above the bank's 2% target.
Governor Andrew Bailey said more hikes could follow unless the Middle East conflict is resolved. The bank expects inflation to peak at around 5% in mid-2027 before falling back to 2% by late 2028.
One committee member voted for an even larger 0.25 percentage point rise.
- 4.0 per cent
- New base rate
- August 2023
- First hike since
- 3.5 per cent
- September inflation
- 9 members for, 1 for 4.25 per cent
- Committee vote
Why it mattersHigher interest rates make borrowing more expensive across the economy and can slow growth, affecting global financial markets and company investment plans.
AustraliaAustralian investors and exporters watch UK policy closely; rate rises there can influence the Reserve Bank's own decisions and affect the Australian dollar's value against the pound.
Corroborated bythenightly.com.au
✓ Claims checked against the source. checked 1 h ago
