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BOE Votes Rate Cut: A Close Call for UK Economy
18 Dec
Summary
- Bank of England narrowly voted to cut interest rates by 25 basis points.
- This marks the fourth interest rate cut of the year by the central bank.
- Inflation, though declining, remains above the Bank of England's target.
In its final monetary policy decision of 2025, the Bank of England narrowly voted to trim interest rates by 25 basis points, lowering the benchmark rate to 3.75%. This decision, made on Thursday, December 18, 2025, represents the fourth rate reduction of the year.
The vote, a close 5-4 split among the nine-member Monetary Policy Committee, reflects ongoing debate about economic conditions. While recent data shows a softening labor market and inflation that has declined faster than expected, a significant portion of the committee believes the current inflation rate of 3.2% remains distant from the 2% target.
Governor Andrew Bailey sided with the majority favoring the rate cut, aiming to provide relief to consumers through cheaper borrowing costs. However, this move is expected to result in lower returns for savers, highlighting the dual impact of monetary policy on different segments of the economy.
