The Bank of England is expected to cut interest rates in December and again early next year, as inflation is projected to ease in the coming months. A new Reuters poll shows most economists now expect rate cuts, reversing last month’s view that borrowing costs would stay unchanged through the end of 2025.
The December meeting will take place after Finance Minister Rachel Reeves delivers her Autumn Budget on November 26. She is not expected to raise income tax, but the government will likely cover the budget gap through smaller tax increases in other areas.
Earlier this month, the Monetary Policy Committee voted 5–4 to hold rates steady, with Governor Andrew Bailey casting the deciding vote. He said he wanted clearer signs of falling inflation before supporting a rate cut.
Nearly 80% of economists—48 out of 61—expect a 25-basis-point cut to 3.75% on December 18, according to the Reuters survey conducted from November 13 to 18. The rest expect no change. This is a sharp shift from October, when over half of economists expected no cuts for the rest of the year. A similar share now expects another cut to 3.50% in the first quarter of 2026.
Gabriella Willis, a UK economist at Santander CIB, said a December cut is the most likely outcome unless inflation data surprise to the upside. She noted that Governor Bailey will remain the key swing voter and that inflation readings for October and November, along with a cooling labour market, will be the “final green light.”
Interest rate futures have almost fully priced in a December rate cut. Inflation has remained at 3.8% since July, almost double the BoE’s 2% target. Upcoming data are expected to show a slight decline to 3.6% in October.
Median forecasts also show inflation averaging 3.0% and 2.5% in the next two quarters. Growth is projected to average 1.4% this year, slowing to 1.1% in 2026.
Willis added that the upcoming Budget will still be disinflationary, although less than previously expected, especially given the smaller effect on demand after ruling out an income tax increase.
