Bank of England Base rate & other news

[willendure]

Think we due a cut to keep up with the Fed.

[Protagoras]

Think we due a cut to keep up with the Fed.

Given the lack of demand (because people have no confidence / spare funds) I'm not sure that reducing interest rates will make much difference. I see no evidence that inflation is being caused by excessive demand, and if this is the case there's not really an incentive for businesses to borrow to invest in capacity.

The beneficiaries of reduced interest rates will probably pay down debt or just survive rather than increase consumption. Meanwhile those who rely on interest income (including premium bond holders) will have reduced income and less to spend.

Periods of excessively low real interest rates in the last 20 years don't appear to have stimulated growth.
Plus, BoE may seek to retain the ability to cut interest rates to allow for the next stock market crash.

[Martin@AS Financial]

According to the Financial Reporter, a rate cut tomorow "now looks like a cert".

Full report here:

Bank of England set to cut rates as inflation falls to eight-month low | Financial Reporter

[willendure]

Given the lack of demand (because people have no confidence / spare funds) I'm not sure that reducing interest rates will make much difference. I see no evidence that inflation is being caused by excessive demand, and if this is the case there's not really an incentive for businesses to borrow to invest in capacity.

The beneficiaries of reduced interest rates will probably pay down debt or just survive rather than increase consumption. Meanwhile those who rely on interest income (including premium bond holders) will have reduced income and less to spend.

Periods of excessively low real interest rates in the last 20 years don't appear to have stimulated growth.
Plus, BoE may seek to retain the ability to cut interest rates to allow for the next stock market crash.

Probably better not to cut, stronger pound will help with inflation.

[Martin@AS Financial]

Bank Rate reduced to 3.75% - December 2025 Monetary Policy Summary and Minutes

Full report here:

https://www.bankofengland.co.uk/mone.../december-2025