November 2025 BoE Review: The ‘Old Lady’ Skips Amid Division On Threadneedle Street

Bank Rate Remains Unchanged

In line with consensus expectations, and my own base case, the MPC maintained Bank Rate at 4.00% at the November confab, marking a ‘skip’ in what had up to now been a predictable pace of delivering one 25bp cut per quarter, which had been ongoing since the easing cycle began last summer.

This decision to stand pat comes as policymakers not only await the outcome of the Budget in around three weeks’ time, but also amid doubts as to whether UK inflation has peaked, as well as the lingering risk of persistent price pressures becoming embedded within the economy. There is also likely a desire, at least among some policymakers, to avoid moving to a negative real Bank Rate (i.e. CPI > Bank Rate), which hasn’t been seen since the tail end of 2023.

A Divided Committee (Again)

Once more, though, policymakers were divided as to the appropriate policy action that should be taken. In fact, the last time the MPC voted unanimously in favour of a rate decision was all the way back in September 2021 – at least we can’t level any accusations of ‘groupthink’ at the BoE these days.

Anyway, the decision to hold Bank Rate steady came via the narrowest possible margin, with 5 of the 9 MPC members preferring to stand pat, and 4 (Deputy Governors Breeden & Ramsden, plus external members Taylor & Dhingra) dissenting in favour of a 25bp cut. For this latter group, there was a belief that disinflation has become more established, and that underlying inflation is on track to return to a pace consistent with the 2% target.

Notably, three times this cycle, a dissent from Dep. Gov. Ramsden in favour of a 25bp cut has led to such action being delivered at the subsequent policy meeting. While history may not repeat, Ramsden has become something of a ‘leading indicator’ for the MPC at large.

Policy Guidance Tweaked

In addition to the dovish vote split, there was also a notable dovish tweak to the MPC’s forward guidance, in something of a surprising move.

As opposed to the prior guidance, alluding to ‘gradual and careful’ removal of policy restriction, the Committee are now much more explicit in terms of the overall easing bias, noting that providing continued disinflationary process is made, ‘Bank Rate is likely to continue on a gradual downward path’. That said, the overall policy approach remains a highly data-dependent one.

Updated Forecasts Have A Short Shelf Life

With the November decision being a ‘Super Thursday’, we also received the Bank of England’s latest round of economic forecasts.

These, though, were also different to the projections that we have become used to, with the Bank now providing both a ‘central projection’, as well as ‘risks and scenarios’ around that projection. Furthermore, the assumptions within this projection are no longer based upon the MPC’s ‘best collective judgement’, but instead a majority view among Committee members as to how they envisage the three key variables of inflation, GDP growth, and unemployment evolving, though the forecast continues to be underpinned by the market-based rate path.

In any case, despite these changes, the forecasts will likely have a much shorter shelf-life than usual. With the Budget just three weeks away, and a significant fiscal consolidation in the form of sizeable tax hikes almost certain, the economic outlook will likely have shifted significantly by the end of the month. In line with precedent, however, the Bank do not model, or respond, to the effects of fiscal changes until they are officially announced government policies.

Anyway, the forecasts themselves were actually relatively little changed from the prior round back in August.

As a result, the central projection now indicates that headline unemployment is likely to peak at 5.1%, 0.2pp higher than the 4.9% foreseen in August, while the MPC continue to forecast disinflation throughout the horizon, with headline CPI seen falling below the 2% target in the second quarter of 2027, before remaining around that level through to the end of 2028. Clearly, this forecast supports the more dovish statement language, as well as the belief of those dissenters that a disinflationary trend is now becoming embedded within the economy.

Governor Bailey Sticks To The Script

Reflecting on all of the above, at the post-meeting press conference, Governor Bailey confirmed that the Committee expect the 3.8% YoY CPI print seen in September is likely to mark the peak for this cycle, but that the Committee need to see the downward inflation path become ‘more established’ before delivering another Bank Rate reduction.

Bailey also reiterated his longstanding view that the market rate curve implies a ‘reasonable view’ as to the forward rate path, while flagging that delivering further rate reductions becomes a ‘closer call’ as Bank Rate inches ever closer to a more neutral level.

Further Cuts Remain On The Cards

Taking a step back, it’s clear that the direction of travel for Bank Rate continues to point lower, as it has now done for well over a year.

My base case remains that the next 25bp cut will be delivered at the February meeting, when not only will the Bank release another round of economic projections, but the MPC will also have received another three inflation reports, likely providing policymakers with sufficient confidence that price pressures have peaked, and that the risk of inflation persistence has receded. From then, my expectation is for the MPC to resume a quarterly pace of easing, towards a terminal rate of 3.25% next summer.

Risks to that view, however, tilt towards a more dovish outturn, were labour market slack to emerge in a more rapid and significant fashion, and providing that Chancellor Reeves avoids delivering any inflation-inducing policies in the Budget. While it would be unusual for the MPC to deliver a December cut, without the backing of fresh forecasts or a press conference to explain such a decision, the finely balanced nature of the Committee means such a move can’t be definitively ruled out at this stage.