- The Bank of England has cut UK interest rates from 4.25 per cent to 4 per cent, the lowest level since March 2023, despite forecasting a sharp rise in inflation.
- For the first time in the Monetary Policy Committee’s history, it required a second vote to achieve a 5-4 majority for the move.
- This interest rate cut is expected to reduce government debt payment costs, a move welcomed by Chancellor Rachel Reeves.
- The Bank raised its economic growth forecast for 2025 to 1.25 per cent but warned that inflation is now set to peak at 4 per cent in September, driven by higher energy and food prices.
- Inflation is projected to return to the 2 per cent target rate by 2027.
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