PwC comments on February 2025 MPC meeting

Commenting on the Bank of England MPC meeting today, Barret Kupelian, Chief Economist at PwC, said:

“As widely expected, the Monetary Policy Committee (MPC) cut interest rates by 25 basis points to 4.5%, with an overwhelming majority in favour. This move is likely the first in a series of cuts this year, with market consensus pointing to a total reduction of around 100 basis points—provided global economic conditions remain stable.

“The Bank’s latest forecasts confirm that economic growth has stalled, and the fact that two members voted for a larger 50 basis point cut signals mounting concerns within the Committee about the risk of a deeper slowdown feeding to inflation eventually falling below its target rate. 

“By cutting rates now, the MPC has thrown the government a boon—offering a potential tailwind for economic activity at a critical juncture. The key question now is not whether more cuts will come, but how quickly they will follow?

“Meanwhile, the Office for Budget Responsibility’s (OBR) short-term growth forecasts appear increasingly out of date. As the chart below illustrates, this misalignment suggests a likely downgrade in assumptions in the future. If so, the government may find itself with little choice but to recalibrate its fiscal stance in response in the Spring Statement.”

Sources: PwC analysis, OBR, Bank of England