Bank of England set to cut base interest rate this week

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Most analysts agree the Bank will reduce the rate from 4%, with some even saying a 0.5% cut is possible.

15th Dec 20250 3,421 1 minute read David Callaghan

The Bank of England is almost certain to cut interest rates on Thursday, most analysts have agreed within public commentary.

Last month, the Bank’s Monetary Policy Committee voted narrowly to hold the base rate at 4% for the second consecutive month.

But a poll of economists by Reuters revealed a unanimous forecast of a 0.25% reduction this time to 3.75%, and its lowest level in nearly three years.

0.5% cut

Some experts believe a 0.5% cut is possible, especially after disappointing economic growth figures released last week.

The inflation figure for November is due to be announced the day before the Bank’s big reveal, and that is sure to be influential on the decision. Last time there was a small reduction in inflation from 3.8% to 3.6%.

A cut could stimulate renewed activity in the housing market with fixed-rate mortgages already at their lowest since the Liz Truss Mini Budget of 2022.

Crucial

For estate agents, Thursday’s announcement could be crucial, as the market tries to recover from the lull before the Budget.

Some analysts are also predicting further cuts at the next MPC meeting at the beginning of February and in mid-March.

I believe markets are underestimating the possibility of a 0.5% mega-cut in the base rate.”

And many mortgage brokers believe a rate cut is on the cards.

Samuel Mather-Holgate, MD, Mather and Murray

Samuel Mather-Holgate, MD at Swindon-based Mather and Murray Financial, says: “I believe markets are underestimating the possibility of a 0.5% mega-cut in the base rate, as the Bank of England, for once, seeks to get ahead of the curve.

“After Friday’s GDP data, the chances of a more serious cut have further improved, at least if inflation doesn’t deliver a curveball on Wednesday.”

Nailed on

Mike Staton, Director at Mansfield-based Staton Mortgages, says: “A rate reduction is nailed on now as the Labour government has effectively handed the baton over to the Bank of England to single-handedly save the UK economy.

“However, Threadneedle Street will keep to its usual form and reduce the base rate by 0.25%.”

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Tagsbase rate 15th Dec 20250 3,421 1 minute read David Callaghan Share Facebook X LinkedIn Share via Email