All I want for Christmas is a rate cut
As inflation cools and growth stalls, all eyes turn to Andrew Bailey to deliver festive relief for borrowers, writes Edmund Greaves
The Bank of England is due to announce its final rate decision just a week before Christmas on 18 December.
Is it too much to ask Father Christmas for an early present this year? Will Andrew Bailey be clad in red, scudding across the sky in his sleigh, a bag full of presents labelled ‘rate cuts’ (ho ho ho!)?
Or perhaps he’ll go full Ebeneezer Scrooge and keep things on hold? After 2024’s inflationary Budget and the triple threat of the ghosts of inflation past, present and future, we might see things stalled until the new year.
Although Rachel Reeves’s 2025 Budget was less overtly inflationary, there are still added costs being given to businesses in the form of minimum wage increases, but for the most part the tax hikes were not as problematic from a price pressure perspective as 2024’s.
Fiscal consolidation is underway, but much of the tax hikes have been backloaded into the forecast period making their impact less overt from the outset. This will likely give rate setters a pause for thought before delivering sweeping cuts.
But the single truth is there was very little to promote growth in the near term from Labour’s plans. This should be enough, alongside weakening employment figures and stalling growth to give Bailey the nod to provide a little Christmas cheer to mortgage holders and businesses alike.
What’s coming up in December 2025
As things wind down to the end of the year we have the usual on-diary events to consider. These include a 10 December US interest rate decision and a European Central Bank (ECB) on 18 December (same day as the Bank of England).
On 12 December, the Office for National Statistics (ONS) monthly GDP numbers are announced. On 16 December we’ll see the ONS monthly labour market data on wages and employment, while the following day on 17 December is the ONS monthly inflation report.
Wishing you a very merry Christmas from all of us at MRM, Octo Members and Mouthy Money.