Bank of England Cuts Base Rate to 3.75% as Bailey Reverses Stance, Marking the Fourth Rate Cut of 2025

COINOTAG News reports that on December 18 the Bank of England enacted a rate cut as the MPC split narrowly. The base rate fell from 4.0% to 3.75%, the fourth cut in 2025. Five MPC members backed the easing, four preferred to hold amid inflation concerns. Data this week showed cooling inflation and staff projections of stagnating UK growth toward late 2025, while Bailey shifted to support the move, reversing the committee’s balance. He cautioned that policy will ease gradually, but quantifying further reductions remains challenging.

From a policy and market perspective, the decision reinforces a data‑driven trajectory for the BoE and the GBP outlook. With the base rate at 3.75% and inflation easing, the currency and yield complex will react to incoming data rather than forecasts. Analysts emphasise a cautious, gradual path ahead, where any further cuts hinge on credible inflation convergence and sustained growth signals.