Bank of England raises interest rates to 4%, first rise in over three years – follow live

Islam Faisal
Economics writer

A rate hike is seen as a “done deal” in the markets, but it ultimately depends on the good judgment of nine individual economists.

They attempted to determine how long the war in Iran would last and whether existing pressures on energy prices would lead to a new wave of price and wage increases.

So far, the Bank has resisted the example of other major central banks in raising rates. There have been three main arguments for caution on rate hikes.

The first is that the UK has seen a rise in car fuel prices, while energy bills have only just started to rise. We have yet to see inflationary pressures spread throughout the economy to wages and other prices.

Furthermore, some of the work to contain inflationary pressures has been done through rate rises in the mortgage market without the Bank of England actually raising rates.

Thirdly, the root cause of all this is a conflict that could escalate or end, depending on the day. And, indeed, plummeting oil markets appear to be betting that the Democrats’ midterm “blue tsunami,” and the Iran-skeptical noises made by U.S. Vice President JD Vance, suggest de-escalation.

Previously, BoE Governor Andrew Bailey suggested that a longer war would lead to higher rates. Where do the last 24 hours lead to this judgment?

So, besides the decision itself, the words of Bailey, whom I will interview later, and the details of a new growth and inflation forecast will be important.