The Bank of England is expected to raise Bank Rate to 4.0% from 3.75% on Thursday as soaring energy costs push inflation higher, marking its first increase since August 2023. The decision comes as officials reassess the neutral interest rate, the level that neither stimulates nor restricts the UK economy, after arguing for much of the year that borrowing costs were already high enough to contain inflation. Economists polled by Reuters expect a 7-2 Monetary Policy Committee vote, although officials may push back against market pricing for three to four additional quarter-point increases in 2027, which would take rates to 4.75%-5.0%. Consumer prices rose 3.5% in the year to September, above the BoE’s July forecast of 3.0%, and the central bank has warned inflation could exceed 4% early next year. Governor Andrew Bailey has said policymakers cannot wait for conclusive evidence that higher inflation is feeding into wages and prices. The MPC voted 6-3 to hold rates in September, while recent growth surprised on the upside and some policymakers have criticised the BoE’s handling of the inflation episode. Investors will scrutinize the minutes, officials’ comments and new forecasts, as well as the BoE’s initial assessment of finance minister John Healey’s budget, which offered modest support for households and motorists partly funded by a bank tax.