Bank’s policymakers cut base rate by quarter point to 4% amid concern about strength of UK economy
Bank’s policymakers cut base rate by quarter point to 4% amid concern about strength of UK economy
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What the rate cut means for mortgages and savings?
The Bank of England has warned that soaring food prices could drive inflation to 4% as it voted for a fifth cut in interest rates in a year, amid mounting concerns over the strength of the UK economy.
In one of its closest decisions since its independence more than 25 years ago, the Bank’s monetary policy committee (MPC) voted by 5-4 to cut its key base rate by a quarter-point to 4%.
Taking borrowing costs to the lowest level since March 2023, a cut was widely expected in financial markets. However, the decision was a close call, with the rate-setting panel for the first time in history holding two votes before reaching its verdict.
Andrew Bailey, the Bank’s governor, said: “We’ve cut interest rates today, but it was a finely balanced decision. Interest rates are still on a downward path, but any future rate cuts will need to be made gradually and carefully.”
The chancellor, Rachel Reeves, will welcome the cut as Labour comes under heightened pressure over its economic management and speculation over tax rises in her autumn budget, and the cut will ease some of the financial pressure on borrowers.
Ministers have sought to claim credit for the Bank cutting rates since the first reduction in borrowing costs, in August last year, from a peak of 5.
