In a closely watched move, the Bank of England’s Monetary Policy Committee (MPC) voted 5–4 to reduce the UK base rate by 0.25 percentage points to 4% on 10th August 2025 – its lowest level since March 2023. This marks the fifth rate cut since August 2024, reflecting the Bank’s cautious approach to balancing inflation control with economic support.
Why Was the Vote So Close?
The narrow margin highlights internal divisions within the MPC. While some members favoured holding rates steady to combat persistent inflation – forecast to peak at 4% in September – others supported a cut to stimulate sluggish economic growth.
Inflation Still a Concern
Despite recent disinflation, CPI inflation rose to 3.5% in Q2 2025, driven by energy and food prices. The Bank remains vigilant, aiming to return inflation to its 2% target without fuelling wage-price spirals.
Economic Growth Under Pressure
UK GDP growth remains subdued, with signs of slack in the labour market. The rate cut is intended to ease financial conditions and support demand.
What’s Next?
The MPC signalled a “gradual and careful” approach to future rate changes. The next decision is due on 18 September 2025.
