The Bank of England’s Monetary Policy Committee (MPC) voted on 6 November to keep the Bank Rate unchanged at 4%, by a narrow 5-4 majority. Five members voted to maintain the current rate, while four favoured a 25 basis point reduction. This marks a tighter outcome than in September, when the MPC voted 7-2 to hold rates steady.
Two members who had supported holding in September – Sarah Breeden and Dave Ramsden – switched to vote for a cut this time, while all other votes remained unchanged.
The Bank’s decision comes ahead of the government’s Budget on 26 November, amid rising speculation that Chancellor Rachel Reeves may announce tax increases. While CPI inflation is seen as having peaked, Governor Andrew Bailey noted that rather than cutting interest rates now, he would prefer to wait and see whether price pressures continue to ease through the year. This has led to speculation that a December could now be possible, rather than cuts re-commencing next year as had previously been assumed.
Progress on underlying disinflation continues, supported by the still-restrictive stance of monetary policy. This is evident in moderating pay growth and a slowdown in services inflation. Disinflationary forces are being reinforced by subdued economic growth and emerging slack in the labour market.
The MPC is seeking to balance the risks to achieving the 2% inflation target on a sustainable basis. While the risks of persistent inflation appear to have diminished, concerns have grown about the possibility of inflation undershooting the target due to weaker demand and a softening labour market. Underlying GDP growth remained sluggish in Q2 2025, and survey data suggest only a modest recovery over the remainder of the year.
This contrasts with the US Federal Reserve, which on 29 October cut interest rates by 25 basis points, lowering its key target range to between 3.75% and 4%, despite operating “blind” as the government shutdown delayed official data releases. Analysts remain divided over the prospect of another cut in December, with the outcome likely hinging on forthcoming economic indicators.
Meanwhile, the European Central Bank (ECB) left interest rates unchanged for a third consecutive meeting on 30 October, as it weighs a modest economic recovery against inflation risks. Preliminary European Commission data show that eurozone GDP grew by +0.2% in the third quarter compared with the previous three months. Inflation remains uneven across member states: Cyprus recorded zero inflation, while rates rose modestly to +1.1% in France and +1.8% in Italy and Greece. In contrast, Romania reported +8.6%, with Estonia and Slovakia at +5.3% and +4.6% respectively. The ECB continues to aim for inflation close to 2% across the euro area.
For more details, you can get the Monetary Policy Summary and minutes of the MPC meeting from the Bank’s website at https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2025/november-2025 or request this from MTA.