London Daily

Focus on the big picture.
Saturday, Nov 08, 2025

Fifth consecutive hike as interest rate raised to 1.25% by Bank of England

Fifth consecutive hike as interest rate raised to 1.25% by Bank of England

There is a marked shift in the Bank's outlook and plan to tackle inflation as it signals there is a chance of more aggressive action ahead to help cool the pace of price growth in the economy.

The Bank of England has raised interest rates for the fifth time in a row to 1.25% and set the scene to act more "forcefully" ahead because of a mounting inflation threat.

There had been speculation of a more aggressive tightening after the sharpest rate hike since 1994 of 0.75 percentage points was imposed by counterparts at the US central bank last night.

But the UK's Bank rate was raised by 0.25 percentage points, as financial markets and economists had expected, continuing the gradual increases that began in December last year as the rate of inflation gathered pace.

However, the Bank said on Thursday it was now forecasting that the headline rate of inflation would top 11% in the autumn - a rise of almost 1 percentage point on the figure it had expected just last month to see at the year's end.


The rate-setting committee was split 6-3 on the rate hike vote, with the minority favouring a rise of 0.5 percentage points.

The BoE dropped its guidance from May when it said most committee members believed "some degree of further tightening in monetary policy may still be appropriate in the coming months".

Crucially, the minutes of the latest meeting read: "The committee will be particularly alert to indications of more persistent inflationary pressures, and will if necessary act forcefully in response."

That was seen as guidance that, as far as Bank rate is concerned, there was now a greater chance of a 0.5% percentage point increase ahead.

As the Bank was giving its update, growing fears of a global recession were continuing to take a hold of financial markets, with stock markets in Europe widely down by more than 2.5% as the recent rush for safe havens reared its head again.

The reopening of economies after the pandemic and, latterly, the effects of Russia's war in Ukraine have been responsible for the bulk of the soaring costs across the world.

The UK's main inflation measure has since hit a 40-year high, leaving economic growth intensely choked by a cost of living squeeze that is only tipped to intensify as energy, food and fuel bills rise sharply.

The anticipated rise of more than £800 in the energy price cap due in October was largely responsible for the adjustment to the Bank's inflation forecast.

Its latest rate action will mean there is further pain for millions of mortgage holders on tracker or standard variable deals.

There is some small relief for savers as savings rates lag inflation considerably.

Although many of the price increases in the economy are outside the Bank's control, it is keen to keep a lid on rises in wages for fear that levels matching the pace of price increases will only make the inflation problem worse.

Its plea for wage restraint has come under attack from unions, which argue that plunging living standards are no fault of their members.

The rail network is set to become the first national battleground in strike action expected to start next week.

Chancellor Rishi Sunak, who has delivered two rounds of financial help to help with rising living costs to date, welcomed the Bank's move but the reaction from business groups was more cautious.

Alpesh Paleja, lead economist at the CBI, a business lobby group, said: "With inflation high and price pressures remaining acute, the Bank of England has rightly raised interest rates again to anchor inflation.

"But with the outlook looking weaker, monetary policy is walking an increasingly fine line between taming inflation and supporting economic activity.

"We expect only meagre economic growth ahead, as a historic squeeze on household incomes bites hard on spending.

"Monetary policy can only do so much, and must now be coupled with government action to prevent a deeper and more prolonged downturn."

Newsletter

Related Articles

0:00
0:00
Close
Apple to Pay Google About One Billion Dollars Annually for Gemini AI to Power Next-Generation Siri
UK Signals Major Shift as Nuclear Arms Race Looms
BBC’s « Celebrity Traitors UK » Finale Breaks Records with 11.1 Million Viewers
UK Spy Case Collapse Highlights Implications for UK-Taiwan Strategic Alignment
On the Road to the Oscars? Meghan Markle to Star in a New Film
A Vote Worth a Trillion Dollars: Elon Musk’s Defining Day
AI Researchers Claim Human-Level General Intelligence Is Already Here
President Donald Trump Challenges Nigeria with Military Options Over Alleged Christian Killings
Nancy Pelosi Finally Announces She Will Not Seek Re-Election, Signalling End of Long Congressional Career
UK Pre-Budget Blues and Rate-Cut Concerns Pile Pressure on Pound
ITV Warns of Nine-Per-Cent Drop in Q4 Advertising Revenue Amid Budget Uncertainty
National Grid Posts Slightly Stronger-Than-Expected Half-Year Profit as Regulatory Investments Drive Growth
UK Business Lobby Urges Reeves to Break Tax Pledges and Build Fiscal Headroom
UK to Launch Consultation on Stablecoin Regulation on November 10
UK Savers Rush to Withdraw Pension Cash Ahead of Budget Amid Tax-Change Fears
Massive Spoilers Emerge from MAFS UK 2025: Couple Swaps, Dating App Leaks and Reunion Bombshells
Kurdish-led Crime Network Operates UK Mini-Marts to Exploit Migrants and Sell Illicit Goods
UK Income Tax Hike Could Trigger £1 Billion Cut to Scotland’s Budget, Warns Finance Secretary
Tommy Robinson Acquitted of Terror-related Charge After Phone PIN Dispute
Boris Johnson Condemns Western Support for Hamas at Jewish Community Conference
HII Welcomes UK’s Westley Group to Strengthen AUKUS Submarine Supply Chain
Tragedy in Serbia: Coach Mladen Žižović Collapses During Match and Dies at 44
Diplo Says He Dated Katy Perry — and Justin Trudeau
Dick Cheney, Former U.S. Vice President, Dies at 84
Trump Calls Title Removal of Andrew ‘Tragic Situation’ Amid Royal Fallout
UK Bonds Rally as Chancellor Reeves Briefs Markets Ahead of November Budget
UK Report Backs Generational Smoking Ban Ahead of Tobacco & Vapes Bill Review
UK’s Domino’s Pizza Group Reports Modest Like-for-Like Sales Growth in Q3
UK Supplies Additional Storm Shadow Missiles to Ukraine as Trump Alleges Russian Underground Nuclear Tests
High-Profile Broodmare Puca Sells for Five Million Dollars at Fasig-Tipton ‘Night of the Stars’
Wilt Chamberlain’s One-of-a-Kind ‘Searcher 1’ Supercar Heads to Auction
Erling Haaland’s Remarkable Run: 13 Premier League Goals in 10 Matches and Eyes on History
UK Labour Peer Warns of Emerging ‘Constituency for Hating Jews’ in Britain
UK Home Secretary Admits Loss of Border Control, Warns Public Trust at Risk
President Trump Expresses Sympathy for UK Royal Family After Title Stripping of Prince Andrew
Former Prince Andrew to Lose His Last Military Title as King Charles Moves to End His Public Role
King Charles Relocates Andrew to Sandringham Estate and Strips Titles Amid Epstein Fallout
Two Arrested After Mass Stabbing on UK Train Leaves Ten Hospitalised
Glamour UK Says ‘Stay Mad Jo x’ After Really Big Rowling Backlash
Former Prince Prince Andrew Faces Possible U.S. Congressional Appearance Over Jeffrey Epstein Inquiry
UK Faces £20 Billion Productivity Shortfall as Brexit’s Impact Deepens
UK Chancellor Rachel Reeves Eyes New Council-Tax Bands for High-Value Homes
UK Braces for Major Storm with Snow, Heavy Rain and Winds as High as 769 Miles Wide
U.S. Secures Key Southeast Asia Agreements to Reshape Rare Earth Supply Chains
US and China Agree One-Year Trade Truce After Trump-Xi Talks
BYD Profit Falls 33 % as Chinese EV Maker Doubles Down on Overseas Markets
US Philanthropists Shift Hundreds of Millions to UK to Evade Regulatory Uncertainty in Trump Era
Israeli Energy Minister Delays $35 Billion Gas Export Agreement with Egypt
King Charles Strips Prince Andrew of Titles and Royal Residence
Trump–Putin Budapest Summit Cancelled After Moscow Memo Raises Conditions for Ukraine Talks
×