Bank of England’s November 2025 Rate Decision: A Close Call Ahead of Autumn Budget
LONDON — The Bank of England (BOE) is set to decide on interest rates this Thursday. This is the last policy meeting before the Autumn Budget on November 26, 2025. Most market economists see the nine-member Monetary Policy Committee keep the rate at 4%. Uncertainty remains as the UK shows mixed economic signals and new tax plans.
An Uncertain Decision
Dean Turner, Chief Euro Zone and U.K. Economist at UBS Global Wealth Management, calls the meeting “one of the hardest to call for some time.” He says that a rate cut is expected when economic signals shift, but the timing is hard to guess.
"It is clear that when policy is tight, inflation falls, and growth slows, rates will drop. The challenge is to know when."
Most experts expect the committee to keep rates unchanged this week. Yet, banks like Barclays, Nomura, Mizuho, and Unicredit point to a possible drop to 3.75%. Julien Lafargue, Chief Market Strategist at Barclays Private Bank, described the decision as “very finely balanced.”
Outlook for Rate Changes
If the BOE holds rates on Thursday, experts think cuts may follow, possibly as soon as December 2025, with more moves in the next year. They see signs in factors such as:
- Inflation, which stayed at 3.8% in September for three months.
- Weak labor data, with unemployment possibly rising to 4.9%.
- Slowing wage growth that meets the BOE’s targets.
Oxford Economics says most committee members wait until data shows a clear trend before changing rates. Allan Monks, Chief U.K. Economist at JP Morgan, explained:
“Further drops in inflation and labor numbers will guide the next move.”
Turner adds that signals after the meeting might point to cuts by February 2026 or even as early as December. At that time, the Autumn Budget and its report on economic impact should be available.
Impact of the Upcoming Autumn Budget
This decision happens just before the Autumn Budget. Chancellor Rachel Reeves may raise taxes to close a gap that is estimated at between £20-50 billion ($20-$65.2 billion). These tax changes, including increases in income tax, might cool consumer spending and ease inflation.
Economist Andrew Wishart of Berenberg commented:
"If income tax rises, it will add pressure on household incomes already hurt by high inflation and slow pay growth. In turn, demand may drop and inflation ease."
Early tightening of fiscal policy could lead the BOE to cut rates by 25 basis points twice next year, which might bring the rate down to 3.50%. A further drop to 3.25% in 2026 is also possible.
Summary
- BOE November 2025 meeting: Likely to hold rates at 4%, though a cut to 3.75% is possible.
- Future rate cuts expected: May start in December 2025 or February 2026, as weak growth and falling inflation guide policy.
- Autumn Budget impact: Expected tax hikes may lower consumer spending and ease inflation, setting the stage for rate cuts.
- Market sentiment: Bank officials prefer cautious moves and clear signs in the data before lowering rates.
The BOE’s decision and stance ahead of the fiscal plans will be closely watched by investors, businesses, and policy experts as the UK finds its way through a delicate recovery amid inflation and tighter finances.
Stay tuned for updates on the Bank of England’s interest rate decision and its impact on the UK economy.
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