By Atoyebi Nike
The Bank of England has cut its benchmark interest rate to 4 percent the lowest since early 2023 in a bid to support the UK economy amid lingering fallout from US trade tariffs.
Thursday’s quarter-point reduction, backed by a narrow 5-4 vote after a rare second ballot, comes as the central bank projects modest growth of 1.25 percent this year, slightly up from earlier forecasts.
Governor Andrew Bailey warned that while rates may continue to fall, future cuts would need to be “gradual and careful.”
The UK’s inflation rate surged to 3.6 percent in June, with the BoE expecting a peak of 4 percent by next month. Despite a recent deal to ease some US tariffs on British goods, uncertainty continues to weigh on business sentiment.
Prime Minister Keir Starmer’s new Labour government has faced criticism over rising unemployment and a business tax hike, while Finance Minister Rachel Reeves welcomed the rate cut as relief for households and firms.
The move contrasts with the US Federal Reserve’s recent decision to hold rates steady despite pressure from President Trump, and comes ahead of the European Central Bank’s next policy meeting.
