Keep in mind that new Governor Andrew Bailey of the Bank of England has a test in front of him too for interest rates. He has to decide between a “Santa” approach with deep cuts and a Scrooge approach of no new money still. The monetary policy committee earlier today announced its decision to maintain the bank interest rate at 4%. They’re convinced inflation has already peaked, but Bailey is looking for further evidence before cutting.
Then at their next regularly-scheduled meeting in mid-December, rate setters will have to assess how far they should go with current policies. The choice to hold rates firm was made by the thinnest of margins, highlighting the divide and strife that existed among DOT’s decision-making committee. Bailey holds the important casting vote, further deepening the stakes in any future iterations to come.
Borrowers are clamoring for relief—especially in the form of lower interest rates. As economists are quick to caution, these cuts are unlikely to show up before February 2026, if they materialize at all. The forecast for the long-suffering borrower suggests they might receive slow-rolling presents instead of fast-acting relief. This ambiguity leaves hundreds of thousands of borrowers in limbo. This could lead to increased costs on future mortgage renewals, especially if interest rates remain elevated.
The economic landscape shows mixed signals. The economy will expand by 1.5% this year. By 2026, it’s projected to speed up to 1.2%. Consumer spending isn’t enthusiastic, mirroring the widespread sense that we’re in an economically pregnant pause. Furthermore, labor market fragilities could affect Bailey & co decisions on future rate cuts.