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Bank of England expected to decrease interest rates on Thursday after inflation hit an eight-month low in November.
The Monetary Policy Committee has advised cutting the base rate by four per cent to 3.75 per cent – the fourth cut this year, after cuts in February, May and August. This will bring borrowing costs down to their lowest rates since early February 2023.
The Office for National Statistics (ONS) said the CPI rate fell to 3.2 per cent in November, from 3.6 per cent in October. This was mainly due to food and beverage inflation, which declined to 4.2 percent from 4.9 percent, while alcohol and tobacco prices also eased.
Economists believe the BOE has been reluctant to cut due to lingering inflation, but the recent abundance of economic data means a rate cut is almost certain.
Last week, the UK economy was confirmed to have contracted by 0.1 per cent in October, while this week it showed Unemployment rising, wage growth is slowing and – most notably – inflation falling to a lower-than-expected 3.2 percent.
The results will be announced on Thursday afternoon.
Despite interest rate cut, there is still a ‘huge question mark’ over 2026
Danny Hewson, head of financial analysis at AJ Bell, said: “Although 3.2 per cent is still well above the Bank of England’s target, it is expected to be the final piece of the puzzle that will enable the rate setters to give their festive gift to borrowers with an interest rate cut on Thursday.”
The bank has been entrusted with the task of bringing inflation to the target level of 2 percent.
Ms Hewson said: “There are still massive question marks about what 2026 will bring and the market does not expect the Bank of England to cut interest rates more than once or twice over the next year, so borrowers hoping to see a return to the ultra-low levels many have become accustomed to will have to adapt.”
holly evans18 December 2025 07:28
Bank of England set to cut interest rates over Christmas after inflation slows
Economists believe interest rates are set to be cut before Christmas after inflation hit an eight-month low in November.
The Bank of England is widely expected to cut borrowing costs to 3.75 per cent from 4 per cent when it announces its next decision on Thursday.
This will bring borrowing costs down to their lowest rates since early February 2023.
The bank’s Monetary Policy Committee (MPC) will be encouraged by recent economic data to cut rates at its final meeting of the year, experts have said.
Notably, the decision has been taken following the release of the latest inflation data, which showed a bigger decline in Consumer Price Index (CPI) inflation than analysts had expected.
The Office for National Statistics (ONS) said the CPI rate fell to 3.2 per cent in November, from 3.6 per cent in October.
This was mainly driven by food and beverage inflation which declined to 4.2 percent from 4.9 percent, while alcohol and tobacco prices also eased.
holly evans18 December 2025 07:23