BoE cuts interest rates to 4.5%

Written by Michael Griffiths

06/02/2025

The Bank of England (BoE) has cut interest rates from 4.75% to 4.5% in its first decision on the base rate in 2025.

It marks the third cut to the base rate since the central bank started to bring interest rates down last August from a peak of 5.25%.

At its latest meeting, the BoE’s Monetary Policy Committee (MPC) voted by a majority of seven to two to reduce the base rate by 0.25 percentage points, to 4.5%. Two MPC members were in favour of a 0.5 percentage point reduction, to 4.25%.

In the MPC’s report published today, it noted that CPI inflation was 2.5% in Q4 2024, and that there had been “sufficient progress on disinflation” in domestic prices and wages to bring the base rate down.

The latest decision by the BoE to reduce rates has followed two recent cuts, in August and November, which were the first reductions since the onset of the COVID pandemic in March 2020.

Prior to these cuts, the BoE had increased its base rate from a record low of 0.1% during the pandemic at 14 successive MPC meetings between December 2021 and August 2023, which took interest rates to their recent 5.25% peak.

The BoE’s next base rate announcement is due on 20 March.

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