As widely anticipated, the Bank of England reduced the base interest rate to 4.75% last week, following recent easing of inflationary pressures.

The Bank expects inflation to rise slightly over the next year, reaching around 2.75%, before returning to the 2% target thereafter. In their quarterly report, the Bank indicated that they will take a cautious approach, avoiding rapid or excessive rate cuts. Therefore, it seems unlikely there will be another rate reduction when the Bank meets again on 19th December.

However, the Bank has stated that “if things evolve as expected, it’s likely that interest rates will continue to fall gradually.”

A rate cut can present mixed outcomes depending on whether your business is focused on investment or borrowing. However, with inflation stabilising, this could signal a more stable economy and provide greater certainty for businesses in the year ahead.

See: https://www.bankofengland.co.uk/monetary-policy-report/2024/november-2024