Bank of England to cut rates as inflation eases
The Bank of England is widely expected to cut interest rates on Thursday following a notable slowdown in inflation and signs of weakening economic growth.
However, economists and investors believe that a series of additional rate cuts in 2026 is unlikely, as persistent price pressures continue to weigh on Britain’s economy, News.Az reports, citing Reuters.
Market participants anticipate that the central bank will lower its benchmark interest rate to 3.75% from the current 4%, marking what would be the fourth rate cut of 2025. Such a move would be welcomed by Finance Minister Rachel Reeves and Prime Minister Keir Starmer, both of whom are under pressure as they work to fulfill campaign promises of delivering stronger economic growth for voters.
A quarter-point cut would take Bank Rate to its lowest level in nearly three years, although that would still be almost double the equivalent rate of the European Central Bank.
British inflation remains the highest among the Group of Seven economies - in part because of Reeves' decision last year to raise taxes on employers - even after it fell sharply to 3.2% in data released on Wednesday.
Investors are fully pricing only one more BoE rate cut in 2026, most likely by the end of April, although bets on a second one rose after the November inflation drop.
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