The Bank of England is widely expected to cut the Bank Rate by 25bps to 3.75% at its December 2025 meeting, marking the first reduction since August after holding rates steady in September and November. Such a move would lower borrowing costs to their weakest level since 2022, amid easing inflation and mounting signs of economic strain. UK annual inflation slowed to 3.2% in November, the lowest reading in eight months and below the BoE’s forecast of 3.4%. At the same time, GDP contracted for a second consecutive month in October, while private-sector wage growth continued to cool. Investors will closely watch the vote split and guidance from the nine-member Monetary Policy Committee for signals on the policy outlook in 2026. Markets increasingly believe the central bank is nearing the end of its easing cycle, with only one additional rate cut fully priced in for next year.
