Bank of England Cuts Key Rate to 3.75% Amid Easing Inflation

07:21 AM EST, 12/18/2025 (MT Newswires) -- The Bank of England on Thursday reduced its key rate by 25 basis points to 3.75% amid slowing consumer price growth in the UK, with the headline inflation rate expected to hit the 2% target "more quickly" over the near term. The decision is in line with the consensus estimate for the month. In a narrow vote, the Monetary Policy Committee voted 5-4 in favor of a cut, with four members voting to maintain the bank rate at 4%. The MPC reiterated that the potential for further rate cuts remains subject to the inflation outlook. Based on the latest government data, the UK's annual inflation rate eased to 3.2% in November from the previous 3.6%, with the core rate down to 3.2% from 3.4%. However, staff projections see the UK inflation temporarily accelerating in December 2025 due to a rise in tobacco duty and airfares. Looking ahead, the BoE expects the inflation rate to fall to 3% in the first quarter of 2026, then further ease to 2% in the second quarter.