The Bank of England raised its key rate by 25 basis points to 4%, its first increase since August 2023. The decision was approved by eight votes to one, with dissenting member Catherine L Mann advocating a 50-basis-point increase. The central bank expects UK inflation to reach about 5% by mid-2027 before easing as the impact of higher energy prices fades and restrictive monetary policy takes hold. UK inflation rose to 3.5% in September, driven by surging fuel costs, leaving the country particularly vulnerable to energy shocks because it is a net energy importer. Markets had priced in a more than 99% chance of the rate hike and a one-in-four chance of another increase in December.
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