The Monetary Policy Committee (MPC) February 2025 Report outlines the committee’s decision to reduce the Bank Rate by 0.25 percentage points to 4.5%, with two members advocating for a 0.5 percentage point reduction. The MPC’s primary goal is to achieve the 2% inflation target while supporting economic growth and employment. Significant progress in reducing inflation has been observed, although domestic inflationary pressures remain elevated, partly due to global energy costs and regulated price changes. CPI inflation is expected to rise to 3.7% in Q3 2025 before returning to the 2% target. Economic growth has been weaker than expected, with productivity growth slowing and the labor market showing signs of easing. The MPC’s approach is cautious, monitoring inflation risks and economic conditions closely. They aim to gradually withdraw monetary policy restraint, adjusting the Bank Rate as needed to ensure inflation returns sustainably to the target.

Read the full report here: https://www.bankofengland.co.uk/-/media/boe/files/monetary-policy-report/2025/february/monetary-policy-report-february-2025.pdf