Narrow Bank of England vote puts end of interest rate-cutting cycle in sight

Even though five members of the MPC, including Andrew Bailey, backed a Christmas cut, the four in the minority already reckon the endpoint is here. Photograph: Vuk Valcic/Zuma Press Wire/Shutterstock

Rachel Reeves has reason to be cheerful. After last month’s budget, the Bank of England cutting interest rates will come as an early Christmas tonic for the chancellor by lifting some of the pressure on hard-pressed borrowers.

The City had been heavily betting on a sixth cut since August last year, and Threadneedle Street delivered with a reduction in the base rate from 4% to 3.75%. The question, however, is how much further the Bank can go to bring to an end its current easing cycle, after a painful hump in inflation over the past year.