Bank of England November 2025 rate decision

LONDON — The Bank of England will make its final interest rate decision on Thursday ahead of the Autumn Budget later this month. Economists say that while it is more likely that the central bank will keep interest rates steady, that is not a given.

“We can never know for sure which way any meeting will go, but this is one of the most difficult meetings to call for some time,” Dean Turner, UBS Global Wealth Management’s Chief Investment Office UK Economist and euro zone chief, said on Tuesday.

“It’s not a question of whether they will cut interest rates at some point; the answer is yes, we believe they will… If policy is tight, inflation is falling and growth is lackluster, then interest rates will fall. The hard part is predicting when they will fall,” he added.

Economists mostly predict that a majority of the BOE’s nine-member monetary policy committee (MPC) will vote to keep the key interest rate, known as the Bank Rate, unchanged at 4% at its November meeting.

However, some naysayers such as Barclays, Nomura, Mizuho and Unicredit believe there could be a surprise cut to 3.75% today. Julien Lafargue, chief market strategist at Barclays Private Bank, acknowledged on Tuesday that although there was a case for a rate cut this month, it was “a very well-balanced decision.”

In any case, there is general consensus that rate setters may cut interest rates in December and again next year in response to inflation and softening in labor market data, with inflation expected to remain unchanged at 3.8% for the third consecutive month in September.

Most MPC members are more concerned about the consequences of cutting interest rates too quickly rather than too slowly, and the BOE will want to see evidence of sustained downside surprises in the data and wage growth slowing to a pace consistent with the target before voting to cut rates again, Oxford Economics said in the analysis.

“If we’re right and the BOE pauses [this] “The question next week will become when will the next cut come,” Allan Monks, JP Morgan’s chief UK economist, said in a note.

“We have argued that downward surprises in inflation and labor market data will determine this. For example, further soft sequential increases in core CPI services and private wages, along with a rise in the unemployment rate to 4.9% in September, could be important.”

Assuming the BOE holds rates on Thursday, UBS’s Turner said he expects the central bank to “signal that a cut is coming in February at the latest, perhaps in December.”

“Policymakers won’t be equipped with new forecasts in December, but they will have the budget and impact analysis in their pocket,” he said.

Chancellor Rachel Reeves is expected to announce tax increases as she looks to fill the gap. a financial black hole Based on assumed estimates of the cost of U-turns in, among other things, lower productivity, debt payments and welfare spending cuts, the figure is estimated at between £20-50bn ($20-65.2bn).

Earlier this week, Reeves gave a clearer indication that tax increases are coming and whether raising the income tax would be considered as a way to raise revenues, but he did not provide further details. Tax increases will likely act as another shock absorber on inflation by reducing consumer demand.

“If the measures [in the budget] Including an increase in income tax would increase pressure on households’ real incomes due to high inflation and slowing wage growth. “Inflation will likely decline as these factors put pressure on demand,” Berenberg economist Andrew Wishart said in a note Friday.

“If so, this would allow the Bank of England to cut interest rates by 25 basis points to 3.50% at least twice next year. A front-loaded fiscal tightening would open the door to a third cut to 3.25% in 2026,” he added.