Bank of England raises benchmark interest rate to 4% for first time in 3 years

The Bank of England raised its benchmark interest rate by 0.25 percentage points to 4 percent Thursday (local time), its monetary policy committee decided.

The rate hike is the first in three years and three months, since the central bank lifted the rate to 5.25 percent in August 2023.

Eight of the nine monetary policy committee members voted for the 0.25 percentage point increase, while the remaining member called for a larger hike to 4.25 percent. A Reuters poll of market analysts had forecast a 7-to-2 vote in favor of a rate increase.

The 5.25 percent rate set in August 2023 had been the highest level in 15 years.

Since then, the Bank of England had either held or cut rates. Following a 0.25 percentage point cut in December last year, it kept the rate unchanged six consecutive times from January through September this year.

Inflationary pressure has persisted since the Iran war broke out in February this year. The consumer price index rose 3.5 percent in September — well above the bank's 2 percent target and the highest level in 11 months.