Highlights
The Bank of England's Monetary Policy Committee (MPC) has taken a measured step toward easing monetary policy, reducing the Bank Rate by 0.25 percentage points to 4.5 percent. The decision, backed by a 72 majority, reflects confidence in the UK's progress on disinflation while maintaining a cautious stance to manage lingering inflationary risks.
Despite a notable decline in inflation over the past two years, CPI inflation stood at 2.5 percent in the last quarter of 2024, with projections suggesting a temporary rise to 3.7 percent by the third quarter of 2025 due to energy and regulated price changes. However, domestic inflationary pressures are expected to ease, supporting a gradual return to the 2 percent target.
Economic conditions remain fragile, with weaker-than-expected GDP growth and declining business and consumer confidence. Labour market conditions have softened, but productivity growth continues to lag, limiting the economy's supply capacity. The MPC acknowledges the need for a careful approach to further policy loosening, balancing risks between inflation persistence and economic stagnation.
While further rate cuts may be considered, the MPC remains committed to keeping monetary policy restrictive until inflation risks are fully contained, ensuring stability in the medium term.
Despite a notable decline in inflation over the past two years, CPI inflation stood at 2.5 percent in the last quarter of 2024, with projections suggesting a temporary rise to 3.7 percent by the third quarter of 2025 due to energy and regulated price changes. However, domestic inflationary pressures are expected to ease, supporting a gradual return to the 2 percent target.
Economic conditions remain fragile, with weaker-than-expected GDP growth and declining business and consumer confidence. Labour market conditions have softened, but productivity growth continues to lag, limiting the economy's supply capacity. The MPC acknowledges the need for a careful approach to further policy loosening, balancing risks between inflation persistence and economic stagnation.
While further rate cuts may be considered, the MPC remains committed to keeping monetary policy restrictive until inflation risks are fully contained, ensuring stability in the medium term.
Definition
Formerly called the Quarterly Inflation Report, the Monetary Policy Report (MPR) is produced by the Bank of England (BoE) every February, May, August and November. The publication updates the central bank's assessment of recent economic developments at home and abroad and sets out the latest official forecasts for growth and inflation. As such, it provides the economic underpinnings for any change in monetary policy made by the Bank's Monetary Policy Committee (MPC). The MPR is released at the same time as the BoE makes its policy announcement
Description
For analysts who want to know the Monetary Policy Committee's latest thinking on the economy, the MPR provides an in-depth guide. As such it offers key information on economic trends and, in particular, areas where the Bank is primarily focused. The MPR is discussed at a press conference held by the BoE governor shortly after its release.
