Bank of England Cut Interest Rates to 3.75% As Europe Holds

Following the Bank of England’s decision to hold interest rates at 4.0% pa on 6^th November 2025 (by a majority vote of 5:4 ) and then

• The US Federal Reserve reducing rates to a range of 3.5% - 3.75% pa last week, and
• UK CPI Inflation (for November) falling to 3.2% pa (from 3.6% pa) and RPI falling to 3.8% pa (from 4.3% pa)

It was widely expected that the Bank of England would cut interest rates today.

The Bank of England Monetary Policy Committee (MPC) has today confirmed, by a slim majority vote of just 5:4, to cut UK interest rates to 3.75% pa (from 4.0% pa)  This was close again at 5:4 with just one MPC member changing sides since last month.

Comment

Clearly, the MPC is still interested in getting inflation down.  Let’s not forget, with our news item yesterday on inflation, that only 3 of the 12 areas of spending monitored are at or below the Bank of England’s inflation trend growth of 2% pa.  Any cut in interest rates may encourage more stubborn inflation.  This is perhaps why the vote was close but the MPC also has eyes on ‘rocketing’ interest payments on government debt, so a rate cut was needed to bring gilt yields down.

See Inflation Article:  CPI 3.2% RPI 3.8%

EU Rates Update Today

Interestingly, today was also the turn for 3 central banks in the EU and EEA to decide on rates, where the ECB was bullish for inflation to remain low and economic growth to rebound in 2026.

• European Central Bank (EU) held rates at 2.0% pa.
• Norges Bank (Norway's Central Bank) held rates at 4.0% pa.
• Riksbank (Sweden's Central Bank) held rates at 1.75% pa.