Rising Pressure on the Bank of England to Cut Interest Rates
The recent economic data released in September has sparked renewed discussions about the potential for the Bank of England to cut interest rates in December. According to Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory organizations, the combination of lower-than-expected inflation, softer wage growth, and signs of slowing activity in the third quarter strengthens the case for a rate cut.
The Bank of England recently voted to keep rates at 4%, with a close 5-4 decision highlighting internal divisions within the Monetary Policy Committee. Four members supported an immediate quarter-point reduction, arguing that current rates may already be “significantly too high.” This decision, while expected, has shifted the focus toward when the first cut might occur.
Green emphasizes that the economy is showing signs of losing momentum. Three consecutive months of 3.8% inflation, coupled with slowing wage growth and weakening consumer demand, indicate a need for action. “The data tell a consistent story — inflation has peaked, and real economic activity is starting to feel the strain of higher borrowing costs,” he notes.
UK inflation has remained below 4% since July, with core inflation continuing to moderate. Official data also shows that wage growth has cooled in September from its summer highs, while retail sales and business investment have softened during the third quarter. These trends suggest that the economy is under pressure, and delaying action could risk pushing it into a deeper slowdown.
The Bank’s latest decision comes amid a backdrop of global monetary easing. The European Central Bank has signaled openness to rate cuts in early 2025, while the Federal Reserve has slowed its tightening pace and hinted at a likely downward move. Green warns that the UK risks falling out of sync if it maintains restrictive settings while other major economies pivot.
“A December cut would show readiness to respond to evolving data rather than clinging to backward-looking caution,” he explains. He adds that maintaining rates at 4% despite softening demand will weigh heavily on households and small businesses over the winter. Mortgage renewals are already squeezing disposable income, and firms are holding back on investment. The longer this drag persists, the more lasting the damage to productivity and growth.
Green argues that a modest 25 basis-point cut in December would be both symbolic and practical. It would signal confidence that inflation is under control while helping to stabilize consumer and corporate sentiment heading into 2025. It would also align monetary and fiscal policy more effectively after the Budget.
Markets are already pricing in the likelihood of a cut within the next two meetings. “Investors are reading the same signals the Bank is: inflation is anchored, the labour market is cooling, and output is stagnating,” he says. This mix calls for pre-emptive adjustment rather than waiting for cracks to widen.
He stresses that the Bank’s credibility depends not only on defeating inflation but also on avoiding unnecessary economic damage. “Inflation is yesterday’s fight. The challenge now is sustaining growth without reigniting price pressures. The evidence points to a window of opportunity in December to start rebalancing policy.”
Green concludes that the narrow vote shows how close the debate has become. “The Bank should use the next six weeks to prepare markets for a measured step in December. Doing so would show that it recognizes the changing reality of the UK economy and is ready to act decisively.”