Bank of England raises rates to 4% for first time since 2023, warns inflation may near 5%

The Bank of England raised its main interest rate by a quarter point to 4% on Thursday, its first increase in more than three years, to tackle an inflation shock stoked by the Iran war. The Monetary Policy Committee voted 8-1, and the lone dissenter, Catherine Mann, wanted a half-point rise to 4.25%. The bank warned that inflation would climb to about 5%, far above its target. Governor Andrew Bailey said today's increase shouldn't be seen as the first in a long sequence of hikes, but that unless the Middle East conflict is resolved, it does not seem to be the last. Two-year gilt yields rose 3 basis points to 4.77%, and according to Bloomberg, markets priced roughly a 50% chance of another quarter-point rise next month.

Left-leaning outlets The Guardian and The New York Times lead with the first rate rise in three years and the inflation warning. The Guardian's headline ties further rises to the Iran war's end, and its excerpt stresses the cost-of-living crisis, noting that many will be incredulous at a rise in that climate, and that gilt yields fell 4 basis points. The NYT offers a plain account of the decision and inflation forecast with little market or political color. Alternative outlets ZeroHedge and AP share the core facts. ZeroHedge adds the vote split, Bailey's written comments, and the market odds, while AP frames the move as a response to the war and notes the bank left room for more increases if the conflict escalates again. The right-leaning Washington Times leads instead with falling energy prices after the U.S. midterm elections, saying that if sustained they could limit further hikes; its excerpt does not mention the 5% forecast or the Iran war. All sides report the rate decision itself. They differ on the outlook: left and alternative outlets emphasize the war and the risk of more increases, while the right emphasizes easing energy prices.