Financial markets are positioning for a pre-Christmas interest rate cut by the Bank of England (BoE) today, with policymakers widely expected to reduce the benchmark Bank Rate from 4.0 percent to 3.75 percent at a Monetary Policy Committee meeting scheduled for midday.
This anticipated move would take borrowing costs to their lowest level since early 2023 and marks the latest easing step in the central bank’s response to slowing inflation and weakening economic conditions.
The case for a cut has strengthened following data showing a sharper-than-expected drop in UK inflation to 3.2 percent in November, the lowest in eight months, driven by slower price rises in food and other household categories.
The inflation figure remains above the BoE’s 2 percent target but has given policymakers greater confidence that price pressures are easing.
The decision comes amid a broader global context in which other central banks, including those in Sweden, Norway and parts of the eurozone, are opting to hold rates steady, reflecting divergent economic pressures across regions.
A Bank of England rate cut would have immediate implications for UK borrowers and financial markets by lowering the cost of credit, while also shaping expectations for future monetary policy in major economies heading into the new year
By Michelle Ndaga
