Bank of England Cuts Rates Amid Economic Slowdown and Rising Unemployment
The Bank of England has reduced its base rate by 25 basis points to 3.75%, marking the fourth cut this year. The decision, passed by a narrow 5-4 vote among the Monetary Policy Committee, reflects deepening divisions over monetary policy as the UK economy shows signs of strain.
Inflation in November dropped to 3.2%, undershooting the Bank's forecast of 3.4% and continuing its downward trajectory from 3.6% in October. Meanwhile, unemployment has climbed to 5.1%—the highest level since January 2021—while GDP contracted by 0.1% through October.
Market expectations now point to just one additional rate cut in 2026, likely by April. The MOVE brings borrowing costs to their lowest level since February 2023, signaling growing concern about economic stagnation despite persistent inflationary pressures.
