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last mo.

Bank of England Set to Keep Rate at 3.75% After December Inflation Uptick

Markets assign a very low chance of a February change, with new forecasts set to steer expectations for spring easing.

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People walk past the Bank of England in the City of London Financial district in London on March 5, 2025. (Photo by Ben STANSALL / AFP) (Photo by BEN STANSALL/AFP via Getty Images)
Bailey, the Bank’s governor, said in December he expected inflation to fall to the 2 per cent target by April

Overview

  • Economists broadly expect the MPC to leave policy unchanged on 5 February, citing CPI’s rise to 3.4% in December and limited fresh evidence of disinflation.
  • Market pricing points to two quarter‑point cuts later in 2026, with the first widely pencilled in for March though some forecasters look to April.
  • Recent MPC decisions have been narrowly split, and Governor Andrew Bailey could again be the decisive vote after tipping a 5–4 cut in December.
  • Investors put the probability of a February cut at about 2%, reflecting caution over persistent inflation pressures and wage growth concerns.
  • Budget changes to household energy support are expected to lower measured inflation by roughly 0.5 percentage points from April, reinforcing the case for later easing.