Story perspectives

Markets See 98% Chance Bank Rate Rise to 4%

By Drooid · Oct 21, 2026, 6:04 PM UTC · How we work

Summary

Story summary

Inflation rose to 3.5% in the 12 months to September 2026, the highest since October 2025.
Motor fuel prices jumped nearly 30% because of the Iran-U.S. conflict.
Markets give a 98% chance the Bank of England will raise the Bank Rate to 4% on November 5.
Services inflation accelerated to 3.7% year-on-year in September.
Public sector net borrowing hit £24.5 billion in September, pushing total debt above £3 trillion (94% of GDP).

History

Historical Context

The 1973 oil crisis, triggered by the Arab oil embargo in October 1973, sent global oil prices soaring and sparked stagflation. OPEC’s production cut drove crude from $3 to $12 per barrel—a 300% jump—while the United Kingdom’s inflation peaked at 9% in 1974. Similarly, the 2026 Iran-U.S. clash lifted fuel prices 30%, driving UK inflation to 3.7% and prompting a 4% Bank of England rate hike. The 1973 episode taught policymakers that sharp energy shocks can erode fiscal balances, foreshadowing today’s £24.5 billion borrowing and debt exceeding £3 trillion.

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Story summary

Inflation rose to 3.5% in the 12 months to September 2026, the highest since October 2025.
Motor fuel prices jumped nearly 30% because of the Iran-U.S. conflict.
Markets give a 98% chance the Bank of England will raise the Bank Rate to 4% on November 5.
Services inflation accelerated to 3.7% year-on-year in September.
Public sector net borrowing hit £24.5 billion in September, pushing total debt above £3 trillion (94% of GDP).

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