Bank of England delivers a 25-basis-point interest rate cut

The Bank of England reduced its benchmark interest rate by 25 basis points, lowering it from 4.00% to 3.75%, in line with market expectations, while signaling a potential slowdown in the pace of future cuts.

Data released on Wednesday showed a notable drop in inflation for November, supporting the decision, though the vote was narrowly split at 5-4, reflecting policymakers’ concerns over a slowing economy in the final quarter of 2025.

In the post-meeting statement, Governor Andrew Bailey, who supported the cut, noted that rates remain on a gradual downward path as the labor market remains relatively resilient, but inflation expectations continue to be elevated.

Economists anticipate further reductions next year, potentially bringing rates toward the 3.25%–3.00% range amid expectations of a weak economic backdrop. However, the close split in the MPC vote suggests that reaching consensus on future decisions could be challenging.