United Kingdom: Central Bank leaves rates unchanged in November
Latest bank decision: In early November, the Central Bank voted to keep the Bank Rate at 4.00%, following total cuts of 125 basis points from August 2024 to August 2025. A minority of members on the Bank’s committee voted to lower rates.
Bank remains in wait and see mode: The Bank’s decision was underpinned by a desire to assess the impact of previous monetary easing before embarking on further rate cuts, and a wish to ensure that disinflation continues—especially in a context of headline inflation that is nearly double the 2.0% target.
More cuts likely to come: The Central Bank hinted it could cut rates further going forward, which is also the prevailing opinion among our panelists: Virtually all panelists see multiple rate cuts between now and the end of next year.
Panelist insight: On the outlook, Berenberg’s Andrew Wishart said:
“With the BoE no longer exerting much downward pressure on aggregate demand and inflation, other forces will have to curb them. Fortunately, slowing real income growth and the UK’s imminent fiscal consolidation should meet the task. Together, we expect these forces to turn services price growth onto a downward path in early 2026. That will provide the green light for the next rate cut, but probably not in time for the BoE’s December meeting. If the Chancellor announces a more aggressive and front-loaded fiscal consolidation in the Budget on 26 November, we would likely revise down our forecast for the terminal bank rate from our current forecast of 3.5%.”