United Kingdom Interest Rate

The Bank of England lowered its Bank Rate by 25bps to 4.75% in its November 2024 decision, as expected, marking the second rate cut in four years following the start of its cutting cycle in August. 8 of the 9 MPC members voted for a cut, above expectations of 7 votes, while Catherine Mann opted for a hold. The decision was aligned with evidence of slowing price growth in the UK economy, with September’s inflation print dropping to an over three-year low of 1.7%. Also, services inflation, which reflects underlying price growth that tends to be stickier given the current backdrop, fell to a two-year low of 4.9% but still remained elevated. Despite seeing underlying inflation continuing to slow in the medium term, the Bank expects the expansionary budget delivered by the Labour Party to lift inflation by 0.5 percentage points at its peak. The Bank now sees inflation to end the year at 2.5% and 2026 at 2.2%. In turn, the budget can raise the GDP by 0.75% at its peak impact in one year.