Bank of England expected to raise interest rates as UK growth accelerates

Summarised from 4 outlets · Updated 4 Nov, 14:26 · Archive

The Bank of England is expected to raise interest rates after UK services sector growth reached an eight-month high in October.

The Bank of England is expected to raise interest rates on Thursday after a closely watched survey showed growth across the UK's services sector leapt to an eight-month high in October. S&P Global's purchasing managers' index for services rose from 52.1 to 52.8, with any reading above 50 denoting a rise in activity. The overall UK private sector PMI, including manufacturing, reached 52.9 in October.

Businesses increased their headcount for the first time in over two years, according to the survey figures closely monitored by government officials and central bankers. The dominant services sector posted the fastest level of growth since February while greater demand and increased order books, including spending on artificial intelligence, supported businesses. S&P Global noted that input cost inflation accelerated to its strongest level since June, though the pace at which services firms raised prices slowed slightly.

Tim Moore, economics director at S&P Global, said the signals 'underscore the near-certainty of a Bank of England rate hike in November and collectively raise the likelihood of further Bank of England policy tightening into 2027'. Financial markets expect three further increases in borrowing costs, though most City economists believe inflation is likely to peak in spring next year, potentially limiting additional rate rises to one or two.

How it is being reported

• Bank of England set to hike interest rates to 4% to tackle rising inflationRate-setters are widely expected to tighten monetary policy in a bid to tackle rising inflation in the UK economy.Evening Standard · 4 Nov, 15:44
• Bank of England set to hike interest rates to 4% to tackle rising inflationRate-setters are widely expected to tighten monetary policy in a bid to tackle rising inflation in the UK economy.Independent Business · 4 Nov, 15:44
• UK interest rates increase expected after services sector activity acceleratesPurchasing manager’s index at eight-month high, bolstered by spending on AI as firms regain momentum since start of Iran war Business live – latest updates The Bank of England is expected to raise interest rates on Thursday after a closely watched survey showed growth across the UK’s services sector leapt last month to an eight-month high, bolstered by spending on artificial intelligence. S&P Global’s survey of the services sector in October showed businesses regained much of the momentum they lost after the start of the Iran war, but also felt the impact of a renewed spurt of input price…The Guardian · 4 Nov, 13:53
• Bank of England set for ‘further interest rate hikes’ as businesses boost jobsThe Bank of England is likely to raise interest rates several times in the coming months after businesses increased their headcount for the first time in over two years, analysts have predicted. Survey figures released by S&P Global, which are closely monitored by government officials and central bankers, showed stronger activity across services firms. [...]City AM · 4 Nov, 11:08

In this story: Bank of England · S&P Global · UK

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