The Bank of England is expected to raise its benchmark interest rate on Thursday, from 3.75% to 4%, according to most analysts cited in the BBC report. It would be the first increase in more than three years. The Bank last raised rates in August 2023.
The Bank rate has fallen from its 2023-24 peak of 5.25%. The Monetary Policy Committee has left the rate unchanged at its last six meetings. The Bank will announce its decision at 12:00 GMT.
Analysts attribute the expected rise to inflation, which the report says is driven mainly by petrol and diesel costs. The Consumer Prices Index measure was 3.5% in the year to September 2026, up from 3.1% the previous month and well above the Bank's 2% target. The report links the energy and fuel cost pressure to the ongoing impact of the Iran war.
Chris Cheverall, head of UK at CMC Markets, said: "The decision is increasingly less about whether rates reach 4% and more about what follows after that." He added that the Bank must balance inflation that is still too high against an economy where the growth outlook has weakened sharply.
The report says a 0.25 percentage point rise would add £31 a month to repayments for a typical tracker mortgage, according to UK Finance. It would add about £14 a month for a typical variable-rate mortgage, the same source estimates. Around 510,000 tracker mortgage holders and 470,000 variable-deal holders would be affected. Borrowers on fixed deals would not see an immediate change, but lenders have already priced in the expected rise. As of 4 November, Moneyfacts put the average two-year fixed rate at 5.96% and the average five-year rate at 5.99%.
Savers could see better returns on deposits if the Bank rate rises, the report says.