The Bank of England (BoE) is expected to reduce interest rates in December and again in early 2026, according to a Reuters poll of economists, as inflation continues to show signs of cooling. The anticipated cuts are seen as supportive of trade conditions by easing financing pressures on businesses.
The survey, conducted from November 13–18, found that nearly 80% of economists expect a 25-basis-point cut on December 18, lowering the Bank Rate to 3.75%. Many also anticipate a further reduction to 3.50% in the first quarter of 2026. These expectations come ahead of the Autumn Budget on November 26, where the government is expected to adjust taxes without raising income tax.
Earlier this month, the Monetary Policy Committee voted 5-4 to keep rates unchanged, with Governor Andrew Bailey casting the deciding vote while waiting for clearer evidence of moderating inflation. Inflation has remained at 3.8% since July and is projected to ease to around 3.6% for October, with forecasts pointing to continued declines over the next two quarters.
Economists note that lower interest rates can improve borrowing conditions for companies involved in domestic and international trade. Reduced financing costs can support investment in supply chains, logistics, production, and export activities, helping businesses navigate a shifting global market environment.
Growth is expected to average 1.4% this year and soften slightly to 1.1% next year. Despite modest growth projections, analysts highlight that easing monetary conditions may help stabilise economic activity and support businesses engaged in trade across key sectors.
Interest rate futures markets have already priced in a likely December cut, reflecting broad expectations of monetary easing as part of the UK’s economic adjustment.
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