The Bank of England has cut its base interest rate to 3.75 percent following a closely split Monetary Policy Committee vote of 5 to 4. This marks the lowest rate since February 2023 and reflects growing confidence that inflationary pressures are easing.
Inflation fell to 3.2 percent in November, still above the Bank’s 2 percent target but moving in the right direction. At the same time, economic growth has slowed, with GDP rising just 0.1 percent, while unemployment has increased to 5.1 percent.
Prime Minister Keir Starmer welcomed the decision, highlighting support for households through measures such as lower energy bills. For borrowers, the cut could mean savings of around £15 per month for every £100,000 on tracker mortgages.
The Bank has signalled that any future rate cuts will be gradual and dependent on continued progress in reducing inflation.
