The Bank of England is expected to raise interest rates on Thursday 5 November – for the first time since August 2023. Economists polled by Reuters expect Bank Rate to rise from 3.75% to 4.0%, with a 7–2 vote on the Monetary Policy Committee (MPC). The decision will be announced at 12:00 UK time, with a press conference at 12:30.
Why a rise
The reason is inflation. Consumer prices rose 3.5% in the year to September, well above the BoE’s July forecast of 3.0%. The Bank warned in September that inflation would rise above 4% early next year. The main driver is soaring energy costs linked to the Iran war. The Bank fears “second-round effects”, where higher inflation feeds into wages and wages back into prices. Governor Andrew Bailey has said the Bank cannot wait for conclusive proof of such effects.
In September the MPC voted 6–3 to hold rates, with three members already backing a rise. “Their hands are increasingly being forced, whether they like it or not,” said Rabobank strategist Stefan Koopman, quoted by Reuters.
More important than the decision: what comes next
Markets have almost fully priced in Thursday’s rise. They also expect three to four more quarter-point rises in 2027, taking Bank Rate to 4.75–5.0%. Alexander Harvey of Oxford Economics thinks the BoE may signal that rates are unlikely to reach the level markets have priced in. The vote split and the message in the Monetary Policy Report will therefore be key. Last week’s Budget, with modest support for households and motorists, will only slightly reduce the expected rise in inflation, economists say.
What it means for Poles and Polish businesses in the UK
Our view: the era of rate cuts is over – plan your budget for more expensive money.
- Variable-rate mortgage (tracker, SVR): payments usually rise soon after a BoE decision. A 0.25-point rise means roughly £25 a year more interest for every £10,000 borrowed (our simplified calculation, ignoring capital repayment).
- Fixed rate ending? Lenders price new deals on market expectations, not just the current rate. With markets expecting further rises, compare offers now – many lenders let you secure a deal several months before your current one ends.
- Savings: good news for savers. Check whether your bank raises rates on accounts and fixed-term deposits, and switch if needed.
- Businesses: variable-rate working capital loans, leasing and business cards will get more expensive. Stress-test cash flow at 4.5–5% and consider partial rate hedging.
- The pound: expectations of higher rates support sterling. For people sending money to Poland and firms importing from the EU this usually means a better rate, but a surprise on Thursday could move it sharply.
This article is for information only and is not financial advice. When choosing a mortgage, consider an independent FCA-authorised adviser.
Sources:
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