Chancellor Rachel Reeves Hails “Fastest Pace of Cuts in 17 Years” as Bank Lowers Base Rate to 3.75% for Christmas Boost

Chancellor Rachel Reeves wasted no time in seizing the political narrative following the Bank of England’s decision to cut interest rates. In a statement released shortly after the announcement, she characterized the move to 3.75% as a historic milestone, calling it the “fastest pace of cuts in 17 years.” By framing the decision in this way, Reeves is attempting to project an image of rapid economic recovery under the Labour government, countering the gloomy data on GDP contraction.
The Chancellor’s optimism is built on the tangible relief this cut offers to households. With mortgage rates falling and loans becoming cheaper, she argued that this is “good news for families” just as the festive season creates peak financial pressure. Her comments also highlighted the government’s role in creating the conditions for this cut, specifically pointing to her energy bill support package which the MPC noted would help lower inflation further in 2026.
However, Reeves had to tread carefully around the Bank’s concerns regarding her own fiscal policies. The MPC report mentioned that the rise in employer national insurance contributions had been a “shock” that restrained the fall of inflation. Reeves sidestepped this criticism, focusing instead on the broader picture of falling prices and cheaper borrowing. It is a classic political pivot, emphasizing the positive outcomes while downplaying the complicating factors.
The “fastest pace” claim is factually true but contextually complex. The cuts are fast because they started from a very high peak, necessitated by a severe inflation crisis. Critics might argue that celebrating the speed of the cure ignores the severity of the disease. Nevertheless, for a government looking for wins, a pre-Christmas rate cut is a gift that Reeves is eager to unwrap publicly.
Looking ahead, the Chancellor knows her reputation is tied to this trajectory continuing. If the Bank pauses cuts in 2026 due to the “elevated wage growth” warned of by the hawks, the “fastest pace” narrative will stall. For now, however, the government is riding the wave of lower rates, hoping it carries them through a difficult winter.