Arabic version: رفع سعر الفائدة إلى 4% مع استمرار ضغوط التضخم

According to BBC News, the Bank of England has raised interest rates to 4% from 3.75%, its first increase since August 2023. The move is intended to curb inflation, which has been driven mainly by the impact of the US-Iran war on global oil prices.

The Bank’s rate-setting committee backed an increase, with eight of its nine members voting for the 4% rate and one seeking a larger rise to 4.25%. Governor Andrew Bailey said the decision should not be viewed as the start of an inevitable long sequence of increases, but said another rise may be likely unless the conflict in the Middle East is resolved.

Inflation stood at 3.5% in the year to September 2026, above the Bank’s 2% target. The Bank expects inflation to peak at 4.9% in the middle of next year and not return to target until 2028. In an adverse scenario involving further escalation and higher oil prices, it said inflation could reach 6.2% in 2027.

Higher rates increase borrowing costs for mortgages, loans and credit cards, while potentially improving returns for savers. UK Finance said 510,000 tracker mortgage holders will face an estimated £31 monthly rise in repayments. Fixed-rate homeowners will see no immediate change, although future mortgage products may be affected. The Bank said there was limited evidence so far that higher energy costs had broadly fed through to goods prices, as some firms have absorbed increases through lower margins.