Bank of England cuts interest rates again
As the UK economy continues to struggle, the Bank of England unanimously opted to lower interest rates while grappling with the threat of further inflationary pressures.
The central bank today announced that it is reducing interest by a quarter-point to 4.5%, marking the lowest level since May 2023.
This is the third cut that has been made in over half a year.
The decision comes after the Monetary Policy Committee (MPC) decided to hold rates at 4.75% in December 2024, due to concerns over rising inflation. With inflationary pressures still a concern, the latest rate reduction reflects ongoing efforts to gain a balance between supporting growth and managing inflation risks.
The MPC voted by a majority of 7–2 to with two members preferring to reduce the Bank Rate by 0.5 percentage points, to 4.25%.
Chancellor of Exchequer, Rachel Reeves said, “This interest rate cut is welcome news, helping ease the cost of living pressures felt by families across the country and making it easier for businesses to borrow to grow.
“However, I am still not satisfied with the growth rate. Our promise in our Plan for Change is to go further and faster to kickstart economic growth to put more money in working people’s pockets.”
Unanimous decision
Seven members preferred to reduce Bank Rate to 4.5% at this meeting, “on the basis that there had continued to be sufficient progress on disinflation in domestic prices and wages”. However, these members had a range of views on the economy, with varying concerns about risks in both the domestic and global environments.
Despite two members disagreeing, they also wanted a further cut. They argued towards a 0.5 percentage point reduction in Bank Rate, to 4.25%, although they had different views on inflation dynamics, the structural factors underpinning them, and future monetary policy.
While the UK economy shows signs of slowing down, there are concerns that inflation could pick up again, complicating any efforts to stimulate growth. Headline inflation currently sits at 2.5%, above the target level of 2%, with inflationary pressures still lingering within the economy.
Nevil Durrant, Group CFO of The CFO Centre said, “The BoE has to balance this inflationary picture with the sluggish performance of the UK economy over the last 6 months, declining business confidence, and recent downward revisions by economic analysts in the growth prospects for the UK in 2025”.
The central bank today announced that it is reducing interest by a quarter-point to 4.5%, marking the lowest level since May 2023.
This is the third cut that has been made in over half a year.
The decision comes after the Monetary Policy Committee (MPC) decided to hold rates at 4.75% in December 2024, due to concerns over rising inflation. With inflationary pressures still a concern, the latest rate reduction reflects ongoing efforts to gain a balance between supporting growth and managing inflation risks.
The MPC voted by a majority of 7–2 to with two members preferring to reduce the Bank Rate by 0.5 percentage points, to 4.25%.
Chancellor of Exchequer, Rachel Reeves said, “This interest rate cut is welcome news, helping ease the cost of living pressures felt by families across the country and making it easier for businesses to borrow to grow.
“However, I am still not satisfied with the growth rate. Our promise in our Plan for Change is to go further and faster to kickstart economic growth to put more money in working people’s pockets.”
Unanimous decision
Seven members preferred to reduce Bank Rate to 4.5% at this meeting, “on the basis that there had continued to be sufficient progress on disinflation in domestic prices and wages”. However, these members had a range of views on the economy, with varying concerns about risks in both the domestic and global environments.
Despite two members disagreeing, they also wanted a further cut. They argued towards a 0.5 percentage point reduction in Bank Rate, to 4.25%, although they had different views on inflation dynamics, the structural factors underpinning them, and future monetary policy.
While the UK economy shows signs of slowing down, there are concerns that inflation could pick up again, complicating any efforts to stimulate growth. Headline inflation currently sits at 2.5%, above the target level of 2%, with inflationary pressures still lingering within the economy.
Nevil Durrant, Group CFO of The CFO Centre said, “The BoE has to balance this inflationary picture with the sluggish performance of the UK economy over the last 6 months, declining business confidence, and recent downward revisions by economic analysts in the growth prospects for the UK in 2025”.