Bank of England Cuts Interest Rate to 3.75% as Inflation Cools

The Bank of England's Monetary Policy Committee (MPC) has reduced the Bank Rate by 0.25 percentage points to 3.75%, citing easing inflationary pressures. This move follows a steady decline in inflation and comes after the Bank began easing policy in August 2024, cutting rates by a total of 150 basis points. The decision, made by a 5-4 majority, reflects falling CPI inflation to 3.2% in November from 3.8% in September. Four members voted to maintain the rate at 4%. The MPC expects inflation to fall closer to the 2% target in 2026 Q2, led by weaker demand and slack in labour market. Governor Andrew Bailey emphasized balancing risks around inflation persistence and weakening demand, with further easing dependent on economic data.