Interest Rate Reduced to 4.75%

The Monetary Policy Committee (MPC) aims to achieve the UK’s 2% inflation target while supporting sustainable growth and employment. At its meeting on November 6th 2024, the MPC voted 8–1 to lower the Bank Rate by 0.25 percentage points to 4.75%. This reflects continued progress in disinflation as external shocks ease, though domestic pressures remain. CPI inflation dropped to 1.7% in September but is expected to rise to 2.5% by year-end due to energy price comparisons. Wage growth remains high at 4.8%, and GDP growth is forecast at 0.25% per quarter in late 2024.

The MPC’s November report outlines three inflation scenarios: rapid normalisation, requiring economic slack, or structural shifts in wage and price dynamics. Projections assume inflation will return to 2% over the medium term as economic slack develops. Budget 2024 measures could increase GDP by 0.75% within a year but may add 0.5% to inflation at their peak.

The Committee will maintain restrictive monetary policy until inflation risks subside, carefully monitoring wage dynamics and price-setting behaviours. Future decisions will be based on evolving evidence to ensure inflation returns sustainably to target.

Source: Bank Of England