The Bank of England cut Bank Rate by 25 bps to 3.75% on a 5-4 vote, reflecting a slightly faster expected return of inflation toward target amid subdued growth and rising labour market slack.

• The Bank Rate has fallen 150 bps since peaking in August 2023 after six quarter point cuts. The Rate is now the lowest at the lowest level since January 2023.

• Vote split: 5 members supported the 25 bps cut to 3.75%, while 4 preferred to hold at 4.00%, highlighting a close balance between persistence risks and weaker-demand risks.

• Inflation update: CPI eased to 3.2% YoY in November (from 3.6% in October and 3.8% in September) and was below the BoE’s short-term November MPR forecast, largely due to downside food-price news.

• Near-term path: CPI was expected to fall further in 2026 Q1 to around 3%, with a temporary rise anticipated in December 2025 tied to tobacco duty and firmer airfares inflation.

• Underlying pressures: Services inflation was 4.4% YoY in November (vs a 5.4% peak in April), with the BoE noting continued easing in pay growth and services inflation, though one-off factors earlier in the year still restrained the downtrend.

• Labour market and wages: The LFS unemployment rate rose to 5.1% (three months to October), AWE whole-economy growth was 4.7% (three months to October), and private-sector regular pay growth was 3.9%, consistent with easing wage momentum alongside further loosening.

• Growth backdrop: GDP growth slowed to 0.1% QoQ in 2025 Q3; monthly GDP fell -0.1% MoM in October, and staff expected 0.0% growth in 2025 Q4, underscoring subdued activity.

• Risk balance and guidance: The MPC said inflation-persistence risk was “somewhat less pronounced,” while weaker-demand risks remained, and reiterated Bank Rate is likely to follow a “gradual downward path,” though future easing decisions were described as becoming a “closer call.”