The Bank of England reduced its Bank Rate by 25 basis points to 3.75% on 18 December 2025, extending a sequence of monetary easing that has now delivered six cuts since the Monetary Policy Committee began loosening policy in August 2024. The decision was passed by a narrow 5–4 majority of MPC members, with four members voting to hold Bank Rate at 4%.
Dissenters in favour of keeping the rate on hold argued that underlying inflation pressures had not eased sufficiently to justify a further reduction at this meeting, while the majority judged that the balance of risks pointed to the case for a gradual continuation of the easing path established earlier in the year.
EASING CYCLE
Each reduction has been 25 basis points.
At 3.75%, Bank Rate is nearing what MPC members regard as a neutral level; the Committee said Bank Rate was likely to continue on a gradual downward path, but that judgements around further easing would become a closer call.
The labour market has loosened, with the unemployment rate rising to 5.1% in the three months to October, although some members remained concerned about the persistence of wage growth and services inflation. The MPC has emphasised a data-dependent approach, making clear that the trajectory of future cuts will hinge on how incoming prints for inflation, wages, and economic activity evolve in the months ahead.
The Bank of England has delivered a cumulative 150 basis points of easing since the cycle began in August 2024.