As UK GDP continues to be lacklustre and unemployment remains high, the Bank of England lowered its key interest rate by a quarter point to 3.75% on Thursday. This week’s new inflation statistics, which showed that price pressures fell to their lowest level in eight months in November, supported the decision. The CPI decreased from 3.6% in October to 3.2%.
Prime Minister Keir Starmer and Finance Minister Rachel Reeves, who have so far fallen short of their pledges to spur growth in the UK, will be cheered by Thursday’s decrease, which brings the BoE’s benchmark rate to its lowest position in about three years.
According to the most recent data, GDP declined by 0.1% in October and by 0.1% in the third quarter of the year. According to the UK’s Office for National Statistics, the country’s GDP has grown in just one of the previous seven months. Price pressures remain above the central bank’s target, even as the BoE has shifted its priority to economic stimulus amid declining inflation.
Even if wage growth slows, the bank’s deputy governor, Claire Lombardelli, emphasized earlier this week that there are still “upside risks” to inflation. Economists at ING forecast two further cuts in February and April 2026, in writing before the BoE’s decision on Thursday.
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