Highlights
The Bank of England's Monetary Policy Committee (MPC) has signalled cautious optimism with a narrow 54 vote to cut the Bank Rate by 0.25 percentage points, bringing it down to 4 percent. This decision reflects continued progress in taming inflation, which has sharply declined from its 2022 peak of over 11 percent, thanks largely to the tightening cycle of recent years. While headline inflation nudged up to 3.6 percent in the second quarter of 2025 (driven by food, energy, and regulated prices), a medium-term cooling is expected, with inflation projected to peak at 4.0 percent in September before resuming its downward trend.
Despite signs of economic slack and easing wage pressures, the MPC remains vigilant. Pay growth is still elevated, and inflationary risks, particularly from persistent wage-price dynamics, have not fully dissipated. The Bank is walking a tightrope, supporting a fragile economy without letting inflation reaccelerate.
The decision to cut rates again signals that the restrictive stance has done much of its job, but policy loosening will be slow and evidence-driven. The path ahead is not fixed. Instead, the MPC is keeping its finger on the economy's pulse, ready to respond, but determined not to lose hard-won gains in price stability.
Despite signs of economic slack and easing wage pressures, the MPC remains vigilant. Pay growth is still elevated, and inflationary risks, particularly from persistent wage-price dynamics, have not fully dissipated. The Bank is walking a tightrope, supporting a fragile economy without letting inflation reaccelerate.
The decision to cut rates again signals that the restrictive stance has done much of its job, but policy loosening will be slow and evidence-driven. The path ahead is not fixed. Instead, the MPC is keeping its finger on the economy's pulse, ready to respond, but determined not to lose hard-won gains in price stability.
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.
