MANCHESTER, England — The Bank of England is expected to bow to inflation pressure from soaring energy costs and raise interest rates on Thursday, though it may push back against investors' bets that several more increases will follow next year, Reuters reported on Monday, November 2.

Source: Reuters, Bank of England poised to raise rates but may push back on bets for more, November 2, 2026

Economists polled by Reuters expect the BoE to raise Bank Rate to 4.0% from 3.75%, its first hike since August 2023, when inflation was still more than triple its 2% target, Reuters said. Finimize's preview of the decision reached the same conclusion: Bank Rate is expected to rise to 4.0% as the Bank tries to stop inflation from sticking around, with September consumer prices up 3.5% year-on-year against the Bank's July forecast of 3.0%.

Source: Finimize, Bank Of England Looks Set To Raise Rates Again, November 2, 2026

"Their hands are increasingly being forced"

The BoE was criticised for underestimating how persistent inflation would prove the last time energy costs surged, and it is wary of being caught out again, with global energy prices high and little sign of a lasting end to the Iran war, Reuters reported. Back then, the BoE was among the first major central banks to raise rates; this time the US Federal Reserve and the European Central Bank have moved first. Governor Andrew Bailey has said the BoE cannot wait for conclusive proof of second-round effects — where higher inflation feeds into wage- and price-setting — or it will act too late. "In other words, their hands are increasingly being forced, whether they like it or not," said Stefan Koopman, senior macro strategist at Rabobank. "At some point, even a committee that would probably rather sit tight has to make good on at least some of what is priced (in the market). That time is now."

Source: Reuters, Bank of England poised to raise rates but may push back on bets for more, November 2, 2026

But how much evidence is enough, and whether the drawn-out Iran war makes some second-round effects inevitable, have divided the Monetary Policy Committee, which voted 6-3 to hold rates in September, Reuters said. Bailey said last month that businesses he had spoken to seemed to be absorbing higher costs more than in 2022. In September the BoE warned that inflation would rise above 4% early next year, and said the jump in energy prices since its July forecasts bore similarities to its "adverse" scenario, in which inflation risked becoming entrenched.

Source: Reuters, Bank of England poised to raise rates but may push back on bets for more, November 2, 2026

A 7-2 vote expected — and a fight over what comes next

The Reuters poll pointed to a 7-2 vote in favour of a hike, with external members Alan Taylor and Swati Dhingra seen as most likely to continue to vote to keep rates steady; both have stressed spare capacity in the economy as a reason to wait, though recent growth figures have surprised to the upside, Reuters reported. Hawkish policymakers such as Chief Economist Huw Pill and external members Catherine Mann and Megan Greene have criticised the BoE's handling of the current episode — but even they may baulk at endorsing market pricing of three to four more quarter-point hikes in 2027, which would take Bank Rate to between 4.75% and 5.0%. "While we don't expect a clear steer from the Committee on how many hikes they're planning, it's possible that the meeting minutes or Bailey … signal that Bank Rate is unlikely to reach the level that is priced in by financial markets," said Alexander Harvey, UK economist at consultancy Oxford Economics. Unlike financial markets, economists polled by Reuters last month were split on whether further hikes would follow after November's.

Source: Reuters, Bank of England poised to raise rates but may push back on bets for more, November 2, 2026

Alongside new economic forecasts, investors will be watching for the BoE's initial assessment of finance minister John Healey's budget, delivered last week, Reuters said. Healey offered modest support to households and motorists struggling with higher energy costs, funded partly by a tax on banks; economists said the measures would only slightly reduce the expected rise in inflation. Yaani, in plain terms: a quarter-point rise to 4.0% makes mortgages, loans and credit more expensive across the UK — including for the large Punjabi and Indian communities in Britain — and the real question on Thursday is not the hike itself but whether Bailey signals that market bets on rates near 5% next year are overdone.

Source: Reuters, Bank of England poised to raise rates but may push back on bets for more, November 2, 2026