BoE Delivers Festive Rate Cut, But Crypto Yawns at Dovish Cheer
Yesterday, December 17, 2025, brought sharper-than-expected UK inflation data, dropping to 3.2% in November from 3.6%, paving the way for the Bank of England's Monetary Policy Committee to announce a 25 basis point cut today, lowering the base rate from 4% to 3.75%. This narrow 5-4 vote reflects ongoing divisions, with four members preferring to hold amid lingering services inflation at 4.4%.
The decision, widely anticipated after inflation's tumble, signals gradual easing as the BoE forecasts zero Q4 growth but faster inflation decline toward the 2% target next year. Chancellor Rachel Reeves hailed it as the sixth cut since the 2024 election, boosting borrowers like mortgage holders by around £29 monthly on tracker deals.For sterling, this dovish move pressured GBP lower post-data, aligning with the principle that rate cuts weaken currency appeal versus hikes that bolster it.
Yet, the pound's reaction was muted overall, reflecting priced-in expectations.In the crypto market, the BoE's action had limited direct impact, as global risk sentiment dominates Bitcoin and altcoins. BTC hovered around $87,000-$88,000 yesterday amid ETF outflows and broader uncertainty, showing little volatility from UK-specific news.
Lower rates in major economies generally support risk assets like crypto by encouraging liquidity and borrowing, potentially aiding long-term adoption. However, crypto's correlation with US policy—where Fed decisions loom larger—means BoE cuts offer modest tailwinds at best. Investors should note that sustained easing cycles historically correlate with crypto rallies, but short-term reactions remain tied to Nasdaq and dollar moves.
Key takeaway: Gradual UK easing eases borrowing costs without sparking immediate sterling strength, offering subtle crypto support via global liquidity trends—monitor for sustained risk-on shifts.
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