CBI responds to latest interest rate decision - May 2025

Alpesh Paleja, Deputy Chief Economist, CBI, said:

“Today’s cut to interest rates was widely anticipated, underscoring the Monetary Policy Committee’s continued preference for a gradual loosening of monetary policy.

“The big question now is whether this gradualism will persist. Disinflationary risks have intensified over the last couple of months: US tariffs pose a fresh headwind to growth, global oil prices have fallen and, at home, the labour market is cooling.

“But heightened uncertainty could keep the MPC from easing off on the brakes too much. Evolving global trade dynamics—and the potential for further restrictions—could affect UK inflation in either direction. And the Committee remain concerned about a decline in domestic supply capacity, which could put further pressure on prices.

“With so many moving parts in the global and domestic outlook, the Committee may maintain a cautious stance. But with inflation risks increasingly tilting to the downside, a faster pace of rate cuts may become more palatable to a growing number of members.”