This Thursday, the 18th, the Bank of England lowered interest rates in the United Kingdom by a quarter of a point, to 3.75%, to boost the economy in the face of falling inflation and weak growth.
The Monetary Policy Committee took the decision by five votes in favor and four against, which reflects that the internal division over the pace of monetary easing still persists.
This is the sixth drop since August 2024, when the current cycle of cuts began after years of increases that began in December 2021, starting from historically low levels.
The cycle of increases was motivated by high inflation during Covid, which led to a peak in the base rate of 5.25% in July 2024.
“We left the peak of inflation behind and (it) continued to fall, so today we cut interest rates for the sixth time, to 3.75%,” said central bank governor Andrew Bailey when announcing the decision.
“We continue to consider that rates are on a gradual downward trajectory, but with each cut we make, deciding how far to continue to fall becomes a more complicated decision,” he said.
On this occasion, the Bank of England assessed the evolution of the consumer price index (CPI), which in November fell to 3.2% compared to the maximum point this year of 3.8%, approaching the official target of 2%, which is expected to be reached in 2026.
On the other hand, the British economy continues to slow down: the Gross Domestic Product (GDP) grew just 0.1% in the third quarter of 2025 compared to the previous quarter, and in October it contracted 0.1%, according to the latest data from the Office for National Statistics (ONS).
In turn, unemployment rose to 5.1% between August and October, against a rate of 5% recorded in the previous three months, confirming fears of a cooling of the economy.
In the latest forecasts published in November, the Office for Budget Responsibility (OBR), which oversees public finances, raised its estimate for British GDP growth to 1.5% in 2025, against a previous forecast of 1%.