Highlights
The Bank of England's November 2025 Monetary Policy Committee decision reflects a cautious shift in tone, keeping Bank Rate at 4 percent following five cuts since August 2024. While headline CPI inflation appears to have peaked at 3.8 percent, underlying disinflation is progressing slowly, supported by easing wage growth, softer services inflation and growing slack in the labour market. However, the committee remains divided, with four members favouring a further 0.25 percent reduction amid rising concerns over weak demand.
The outlook is finely balanced. On one side, elevated administered prices, persistent wage pressures and entrenched inflation expectations risk slowing the path back to the 2 percent target. On the other hand, subdued GDP growth, falling vacancies, and household caution suggest a risk of inflation undershooting over the medium term. This tension explains the MPC's gradual approach as further rate cuts will depend on continued evidence of weakening inflationary pressures, without triggering a sharper downturn in employment or spending.
Although business and consumer confidence remain fragile, easing borrowing costs and improving global conditions offer potential support for 2026. In essence, policy is delicately navigating between preventing inflation persistence and avoiding an unnecessary squeeze on already weak demand.
The outlook is finely balanced. On one side, elevated administered prices, persistent wage pressures and entrenched inflation expectations risk slowing the path back to the 2 percent target. On the other hand, subdued GDP growth, falling vacancies, and household caution suggest a risk of inflation undershooting over the medium term. This tension explains the MPC's gradual approach as further rate cuts will depend on continued evidence of weakening inflationary pressures, without triggering a sharper downturn in employment or spending.
Although business and consumer confidence remain fragile, easing borrowing costs and improving global conditions offer potential support for 2026. In essence, policy is delicately navigating between preventing inflation persistence and avoiding an unnecessary squeeze on already weak demand.
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.
