The Bank of England has lowered interest rates by 25 basis points in its final policy decision of the year.
The British central bank’s nine-member monetary policy committee voted 5-4 to cut the benchmark interest rate by 25 basis points, lowering it to 3.75%.
It was the Bank of England’s fourth interest rate cut of 2025.
Economists and financial markets had widely expected the latest cut, which comes as the economy and labour market weaken, and with inflation on the decline.
Still, the vote to cut rates again was a narrow one, with Bank of England Governor Andrew Bailey voting against the move.
Many policymakers at the central bank feel that the current inflation rate of 3.2% is too high and far above the annualized 2% target.
However, lower interest rates will be welcomed by consumers who have been struggling with high prices and borrowing costs.
Many economists expect the Bank of England to cut interest rates again in early 2026 if macroeconomic data continues to deteriorate.
JPMorgan Chase (JPM) is currently forecasting two more interest rate cuts in March and June of next year, which would bring the Bank of England’s benchmark rate down to 3.25%.
