LONDON: The Bank of England cut interest rates on Thursday after a narrow vote by policymakers but it signalled that the already gradual pace of lowering borrowing costs might slow further.

After a big drop in inflation and a new forecast from BoE staff that the economy is stagnating, five Monetary Policy Committee members voted to lower the BoE’s benchmark rate for the sixth time since August 2024 to 3.75 per cent from 4pc.

The four other members supported no change as they worried about the potential for inflation - still the highest among the Group of Seven economies - to remain too high. Analysts polled by Reuters last week had mostly expected a 5-4 vote for a rate reduction as Britain’s economy struggles to grow and inflation falls.

Governor Andrew Bailey changed his view and voted for a cut as he sees inflation returning close to the BoE’s 2pc target as soon as April or May next year, about a year earlier than forecast by the central bank just last month.

Published in Dawn, December 19th, 2025