Bank of England Raises Rates to 4% as Energy Prices Bite

The Bank of England raised Bank Rate by 0.25 percentage point to 4 percent on Thursday, November 5, after its Monetary Policy Committee voted 8 to 1 at a meeting that ended November 4; one member voted for a larger increase, to 4.25 percent, the bank said. 'The conflict in the Middle East is now in its ninth month. Global energy prices have continued to rise from an already elevated level,' the committee wrote. U.K. inflation rose to 3.5 percent in September and is expected to reach about 5 percent by the middle of next year before falling.

The bank said there is still limited evidence that higher energy costs are spreading to other prices and wages, but that the inflationary pressure building up now warrants a rate increase, and that recent economic data have been stronger than expected. It follows the European Central Bank's increases in June and September and the Federal Reserve's in September. The Bank of England's next decision is December 17. For Americans, higher overseas rates can affect the dollar's value and the cost of travel and imported goods.