The Bank of England has reduced its key interest rate to 3.75%, marking the fourth cut this year, after inflation in the UK slowed more than expected. The Monetary Policy Committee voted 5-4 to lower the base rate by a quarter of a percentage point, aiming to boost Britain’s stagnant economy. This decision reflects the central bank’s efforts to balance the risks of inflation with the need to stimulate economic growth.
The interest rate cut comes as inflation fell to 3.2% in November, below the Bank’s forecast of 3.4%. Governor Andrew Bailey emphasized that while progress has been made, inflation remains above the 2% target, and the path for future rate cuts is uncertain. The Bank expects inflation to continue easing, potentially reaching the target by April or May 2026.
The rate reduction is expected to provide relief to borrowers, particularly those with tracker mortgages, and may lead to more competitive mortgage deals. However, the Bank’s cautious stance suggests that further cuts will depend on incoming economic data, including pay growth and services inflation.
