The Bank of England is expected to raise its main interest rate from 3.75% to 4% on 5 November 2026, as inflation rises across the UK. Its decision is due at 12 noon UK time. The rise is not yet confirmed.
A 0.25 percentage point rise would be the first increase since August 2023. It could add to loan costs for some firms and homeowners at a time when fuel bills are already high.
What Are the Key UK Interest Rate and Inflation Figures?
The latest inflation figures show why the Bank of England is considering raising interest rates to 4%. The table below highlights the key rates, inflation data, and fuel prices behind the expected decision.
| Economic indicator | Latest figure |
| Current Bank Rate | 3.75% |
| Expected Bank Rate | 4.00% |
| Expected rate increase | 0.25 percentage points |
| CPI inflation, August to September | 3.1% to 3.5% |
| Bank of England inflation target | 2% |
| September petrol and diesel prices | 169.5p/L and 192.5p/L |
Why Is the Bank of England Expected to Raise Rates?
In September, the Bank’s nine rate setters voted 6–3 to keep rates at 3.75%. The three who disagreed wanted a rise to 4%.
A Reuters poll now points to a 7–2 vote for a rise in November. This is a forecast, not a final vote. The Bank wants to slow price rises and bring inflation back to its 2% goal.
Why Has UK Inflation Risen to 3.5%?
The Office for National Statistics says CPI inflation rose from 3.1% in August to 3.5% in September. Fuel was the main cause of the jump.
In September, petrol costs 169.5p per liter, up 8.2p in month. Diesel rose 10.7p to 192.5p per liter. Motor fuel prices were 29.8% higher than a year ago.
The pressure goes beyond fuel. Core inflation, which leaves food, energy, alcohol and tobacco, rose from 2.6% to 2.8%. Services inflation rose from 3.4% to 3.7%.
Which UK Businesses and Borrowers Could Pay More?
A higher Bank Rate may raise costs on business loans, overdrafts and mortgages with rates that can change. Fixed-rate loans do not tend to change until a deal ends.
That matters for small firms, landlords and people due to renew loans. Higher payments may leave less cash for wages, stock or new plans.
Why are Businesses Expecting Lower Profits?
In the Bank’s October survey of 1,945 firms, 71% expected energy costs to cut profit margins over the next 12 months. 68% expected to raise prices. Firms forecast 3.4% wage growth over the next year.
If firms face higher fuel and loan bills at once, they may have less room to absorb costs.
Could Interest Rates Rise Again in 2027?
Financial markets price in at least three more quarter-point rises in 2027, but many economists expect fewer. No future rise is certain. It will depend on inflation and the economy.
How Can UK Businesses Prepare for a 4% Interest Rate?
A rise to 4% could increase borrowing costs for UK firms with variable-rate loans and overdrafts. Business owners should review their loan terms, check when fixed-rate deals end, and update cash-flow plans to reflect higher interest payments and rising fuel costs. Early planning can help firms protect their cash flow and avoid financial pressure.
How Can LANOP Help with Rising Borrowing Costs?
If the Bank of England lifts rates from 3.75% to 4%, debt costs rise. UK firms with variable loans, overdrafts or commercial mortgages could pay more to borrow. These bills and rising fuel and running costs may strain cash flow and profits.
LANOP Business & Tax Advisors can show how a 0.25-point rise hits finances. Our team can review your current borrowing costs and check your loan repayments.
We can also build cash flow forecasts and find tax planning options for you. We can help owners plan for any possible rate changes in 2027. Talk to LANOP and get clear advice that helps manage costs, protect cash flow, and guide choices in uncertain times.
