18 December 2025
Alpesh Paleja, Deputy Economist, CBI, said:
“Today’s rate cut came as no surprise. Over the past month we’ve seen clearer evidence of easing inflation, slower pay growth, a loosening labour market and weak economic growth. Measures in the government’s Budget also look unlikely to add to inflationary pressures. Taken together, this seems to have been enough for Governor Andrew Bailey – the swing vote on the MPC – to back a cut.
“But the Committee remains deeply divided on the degree of inflation persistence in the economy, as the narrow vote showed. If inflation continues to fall in line with the Bank’s forecasts, we expect one further cut early next year, taking rates to a terminal level of 3.5%. But given the level of disagreement around the table, it wouldn’t take much for that final move to be pushed further into 2026.”