Bank of England Rate Cut Takes Bank Rate to 3.75% on a 5 to 4 Vote

The decision followed data from the Office for National Statistics showing that CPI inflation fell to 3.2% in the 12 months to November 2025, from 3.6% in October. Inflation remains above the 2% target.

Why the majority voted to cut

The MPC said disinflation was judged to be on track and that upside risks to inflation had eased. It noted that the labour market was loosening and that weak demand was restraining wage and price pressures. It also expected measures announced in the Budget to lower CPI inflation by around half a percentage point in April. With policy still judged to be restrictive, the majority considered that further gradual easing was appropriate.

Why four members dissented

The four members who voted to hold were more concerned that inflation persistence, including structural factors and elevated wage growth and inflation expectations, could keep inflation above target, and wanted to keep policy restrictive for longer.

What it means for borrowers and lenders

The Bank of England rate cut lowers the benchmark for variable-rate mortgages, SONIA-linked corporate loans and savings products. Lenders, borrowers negotiating new facilities and treasury teams will note the close vote, which suggests the pace of any further reductions will depend heavily on incoming inflation and wage data. Businesses with floating-rate debt may also review hedging strategies in light of the lower rate.

What happens next

The MPC said Bank Rate is likely to continue on a gradual downward path, but that decisions on further easing will become a closer call. Its next decision is due in February 2026, alongside an updated Monetary Policy Report with new forecasts for growth and inflation.

Sources

• Bank of England: Monetary Policy Summary, December 2025
• Office for National Statistics: Consumer price inflation, UK: November 2025