Bank of England Cuts Interest Rate to 4% in Line with Expectations, Upgrades 2025 Growth Forecast
The Bank of England announced on Thursday a 25 basis point cut in its key interest rate, bringing it down to 4%, in a widely anticipated move aimed at adjusting monetary policy in light of recent economic developments.
Governor Andrew Bailey stated that the central bank is likely to adopt a gradual approach to future rate cuts, indicating a cautious strategy after a prolonged period of monetary tightening.
In its post-meeting statement, the Bank also revised its forecast for UK economic growth in 2025, projecting a 1.25% expansion in GDP – a notable upgrade from previous estimates.
This rate reduction follows the Bank’s decision in June to maintain interest rates at 4.25%, citing concerns over a softening labor market, high energy prices, and rising geopolitical tensions in the Middle East as key risks that warranted a conservative stance.
The Monetary Policy Committee (MPC) vote revealed a division among members, with six voting to keep rates unchanged, while three dovish members supported a further 25 basis point cut, reflecting the Bank's openness to additional easing in the near future, especially amid persistent inflationary pressures and ongoing global uncertainty.
