Bank of England Cuts Rates While ECB Holds Steady

Group 1: Bank of England (BOE) - The BOE cut its key interest rate to a near three-year low of 3.75% from 4%, marking a continuation of rate cuts that began in August 2024 after a pause in November [2] - The decision to cut rates was made with a tight vote, where four of the nine Monetary Policy Committee members preferred to maintain the rate at 4%, indicating differing views on the pace of rate reductions [3] - The BOE anticipates that borrowing costs will continue to decline, but the extent of future cuts is becoming a closer call as inflation risks recede [3][8] Group 2: European Central Bank (ECB) - The ECB decided to hold the deposit rate at 2%, maintaining this level since June, with President Christine Lagarde stating that monetary policy is in a "good place" [5] - Inflation in the Eurozone has decreased towards the ECB's target of 2%, with expectations that it will remain below this level next year and in 2027 before returning to around the target [5] - Economic growth in the Eurozone has been more resilient than anticipated, supported by Germany's infrastructure and military spending, which is expected to bolster the economy next year [5] Group 3: Broader European Central Banking Trends - Central banks across Europe are largely concluding their rate-cutting cycles as inflation is now under control [7] - Investors expect at least one more rate cut from the BOE, while the ECB is projected to maintain its rate at 2% throughout the next year [8]