Bank of England Cuts Interest Rates for First Time Since Pandemic

The Bank of England has lowered interest rates for the first time since the onset of the pandemic, reducing the base rate to 5%.

This marks a shift from a year of steady rates, decided by a close vote within the central bank’s policy committee.

Governor Andrew Bailey, casting the deciding vote, indicated that easing inflationary pressures prompted the cut. Despite this, he cautioned against expecting further significant reductions soon.

The decision comes as the UK faces ongoing cost-of-living challenges and follows a recent drop in inflation to the Bank’s 2% target. The pound weakened against major currencies after the announcement.

The Bank’s forecast suggests inflation might briefly exceed 2% but is expected to fall back to around 1.7% in two years. Economic growth has recently surpassed expectations, although the Bank anticipates a slower rate in the near future.

The central bank emphasized that, despite this rate cut, monetary policy will remain restrictive to ensure inflation control and economic stability.