Bank of England raises interest rates to 4% for first time in three years

The Bank of England raised its base rate from 3.75% to 4% on Thursday, its first increase in more than three years. Eight of nine monetary policy committee members voted for the rise, while Catherine Mann wanted a larger half-point increase. The bank cited inflation pressure from the Iran war, with oil above $100 a barrel, and now expects UK inflation to reach 4.9% by mid-next year, up from 3.2% in its July forecast. Governor Andrew Bailey said another rise was possible, depending largely on a resolution to the Iran conflict. The decision came a week after John Healey's first budget promised relief for consumers.

The left-leaning Guardian leads with the cost-of-living squeeze, noting the hike will hit mortgage borrowers, that real post-tax incomes are expected to fall this year and next, and that many readers will be incredulous, according to its analysis; its headline stresses the first rise in three years. The New York Times, also left-leaning, leads with the warning that inflation could climb to about 5% next year, far above target, and omits the household and budget context. The right-leaning Newsmax frames the hike as a response to the inflation shock caused by the Iran war. The alternative Reuters piece is a pre-decision preview stressing that the move was widely expected and tied to US-Iran war pressures. The sides agree on the rate rise, the Iran-war cause and the inflation outlook; they differ in emphasis, with left outlets stressing household hardship and the right framing it as a policy response to a war-driven shock.