Bank of England Cuts Interest Rate as Expected
The Bank of England cut Bank Rate by 25 basis points to 3.75%, its lowest level since 2022, as easing inflation and growing signs of economic stress prompted policymakers to act. This marked the first rate cut since August. Five policymakers voted to cut rates, while four others voted to keep rates unchanged.
The Monetary Policy Committee (MPC) stated that future policy easing would be guided by developments in the inflation outlook, adding that the degree of policy restraint had eased. UK inflation slowed to 3.2% in November, the lowest in eight months and below the Bank of England's forecast of 3.4%. At the same time, GDP contracted for the second consecutive month in October, while private sector wage growth continued to slow.
Investors will be closely watching the vote results and guidance from the nine-member Monetary Policy Committee for clues on the policy outlook for 2026. Markets are increasingly convinced that the central bank is nearing the end of its monetary policy easing cycle, with only one additional interest rate cut fully priced in for next year. (alg)
Source: Trading Economics
