The Bank of England (BOE) voted narrowly to cut interest rates on Thursday, in its last monetary policy move of 2025. The central bank’s nine-member monetary policy committee (MPC) on Thursday voted 5-4 to trim the benchmark interest rate by 25 basis points to 3.75%, marking the fourth cut of the year. Economists had widely expected the rate trim, which comes at a time of lackluster economic data, softening labor market, and a recent decline in inflation that outpaced expectations.<\/p>\n<\/p>\n
Nonetheless, the vote was a narrow one, with BOE Governor Andrew Bailey siding with more dovish members of the committee rather than the four policymakers who maintain that the inflation rate, at 3.2% in November, is still far from the central bank’s 2% target. In a statement, the MPC said that while inflation remained above target, “it is now expected to fall back towards target more quickly in the near term.”<\/p>\n
On the basis of current evidence, the MPC said the “Bank Rate [the BOE’s benchmark interest rate] is likely to continue on a gradual downward path. But judgements around further policy easing will become a closer call.” Sterling was flat against the dollar after the announcement, as was the FTSE 100. The yield on the benchmark 10-year U.K. gilt was up 3 basis points to 4.510%.<\/p>\n
For now, the cut in rates will be welcomed by hard-pressed consumers as it makes borrowing cheaper, but many lose out with lower returns on their savings. Chancellor Rachel Reeves cheered the central bank’s trim, saying it would help with cost of living pressures. “Today’s interest rate cut is the sixth since the election [in July 2024], the fastest pace of cuts in 17 years and good news for families with mortgages and businesses with loans,” she said in comments on X, while adding that “there’s more to do on the cost of living.”<\/p>\n
Economists expect the central bank could next cut in early 2026 if macroeconomic data continue to allow for more room or maneuver. The BOE said Thursday that it expected the economy to record no growth in the fourth quarter of 2025. “We will see cuts but perhaps not many more from here,” Jack Meaning, U.K. chief economist at Barclays, told CNBC Thursday after the release.<\/p>\n
Morgan Stanley’s Chief U.K. Economist Bruna Skarica and strategist Fabio Bassanin said in a note that they expect another trim in February on the back of a decline in inflationary pressures and a pick-up in the jobless rate. But they anticipated “conservative messaging” around future cuts when that next rate cut comes. For more information, visit Here<\/a><\/p>\n When interest rates are cut, it’s essential to review your savings and borrowing to ensure you’re making the most of the new rates, and consider consulting a financial advisor for personalized advice on managing your finances effectively.<\/p>\n","protected":false},"excerpt":{"rendered":" Bank of England Cuts Interest Rates to 3.75% in Narrow Vote The Bank of England (BOE) voted narrowly to cut interest rates on Thursday, in its last monetary policy move of 2025. The central bank’s nine-member monetary policy committee (MPC) on Thursday voted 5-4 to trim the benchmark interest rate by 25 basis points to […]<\/p>\n","protected":false},"author":1,"featured_media":652,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/image.cnbcfm.com\/api\/v1\/image\/108243410-1766041447905-gettyimages-2251483714-UK_BOE.jpeg?v=1766107695&w=1920&h=1080","fifu_image_alt":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-651","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economic-indicators"},"_links":{"self":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/comments?post=651"}],"version-history":[{"count":1,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/651\/revisions"}],"predecessor-version":[{"id":653,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/posts\/651\/revisions\/653"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/media\/652"}],"wp:attachment":[{"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/media?parent=651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/categories?post=651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sosahustle.com\/blog\/wp-json\/wp\/v2\/tags?post=651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Smart Tip for Readers<\/h2>\n