The Bank of England cut the Bank Rate by 25 bps to 4.00% in August 2025, its fifth rate reduction since the easing cycle began in August 2024, amid signs of continued disinflation and soft economic growth. The decision was passed narrowly in a 5–4 vote.

• CPI inflation rose to 3.6% in June and is expected to peak near 4.0% in Q3 before falling back toward the 2% target.
• Private sector wage growth continued to slow, with regular AWE growth falling below 5% and expected to decline further to around 3.75% by year-end.
• GDP growth was weak in Q2 (+0.1% QoQ) and projected to pick up only modestly in Q3 (+0.3%), with April and May both posting negative monthly readings.
• Labor market slack continued to build: unemployment rose, vacancies stayed below equilibrium, and employment growth weakened.
• One member voted for a 50 bps cut, citing downside risks to inflation and activity, while four members voted to hold, citing persistent inflation expectations and elevated services prices.
• Monetary Policy Report - August 2025