Bank of England Cuts Interest Rate to 3.75% Amid Cooling Inflation

Source: Dukascopy Bank SA
Bank of England lowered the Bank Rate to 3.75% in a narrow 5–4 vote. The majority opted for the cut because inflation has fallen to 3.2% and is expected to hit the 2% target by mid-2026, while a cooling labor market and stagnant GDP growth suggest the economy needs less "restriction." However, the four dissenting members argued for holding rates at 4%, citing concerns that high wage growth and "sticky" services inflation could cause the disinflation process to stall. Overall, the Committee expects rates to continue a gradual decline, though they warned that future cuts will become "closer calls" as they approach a neutral level.



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