Bank of England Cuts Interest Rates to 3.75% on December 18, 2025
On 18 December 2025, the Bank of England reduced the Bank Rate by 0.25 percentage points to 3.75%. This marked the Monetary Policy Committee's fourth rate cut in 2025 and the sixth since the Labour government came to power the previous year.
The decision followed a decrease in inflation to 3.2% in November from 3.6% in October, although inflation remained above the Bank's 2% target. An estimate for GDP in October showed a contraction of 0.1%, indicating a weak economic growth environment.
The rate cut was broadly anticipated by financial markets as a move aimed at providing a pre-Christmas stimulus to the economy. Chancellor Rachel Reeves welcomed the decision, highlighting that recent November budget measures were designed to provide the Bank with greater flexibility to reduce rates.
The government hopes that lowering borrowing costs will increase confidence and stimulate economic growth by making it cheaper for households and businesses to borrow.
