Bank Rate Reduced To 4.5% – February 2025

At its meeting on 5th February 2025, the Monetary Policy Committee (MPC) voted 7–2 to reduce the Bank Rate by 0.25 percentage points to 4.5%, with two members favouring a larger cut to 4.25%.

Disinflation has progressed and restrictive monetary policy has helped curb inflationary pressures. While CPI inflation stood at 2.5% in Q4 2024, it is expected to rise to 3.7% in Q3 2025 due to higher global energy costs and regulated price changes before falling back to around 2%.

Gross domestic product (GDP) has been weaker than expected, and business and consumer confidence has declined. The labour market has eased, but productivity growth remains weaker than expected, limiting economic supply capacity.

Given progress on disinflation, the MPC considers a gradual withdrawal of monetary policy restraint appropriate. However, uncertainties remain regarding inflation persistence and the balance between demand and supply. Monetary policy will stay restrictive until inflation risks are sufficiently reduced, with future rate decisions based on evolving economic conditions.

Source: Bank Of England