Bank of England cuts rates for fifth time since August 2024
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The news: The Bank of England cut rates by 25 basis points on Thursday to 4%, marking its fifth rate reduction since August last year.
The numbers: The central bank’s Monetary Policy Committee voted by a majority of 5-4 to reduce the bank rate by 0.25 percentage points to 4%. The BoE said that the Committee remains focused on squeezing out any existing or emerging persistent inflationary pressures, to return inflation sustainably to its 2% target in the medium term.
Twelve month CPI inflation increased to 3.5% in 2025 Q2 and the BoE expects CPI inflation to increase slightly further to peak at 4.0% in September, before falling back toward the 2% target.
The British pound climbed after the decision, up 0.4% against the dollar at USD1.341.
The context: The 5-4 vote followed a previous three-way split that failed to reach a majority, the first time in the panel's almost 30-year history that two rounds of voting were needed to reach a presentable outcome on rates.
The Committee said that upside risks to inflationary pressures have moved slightly higher since May, adding that a “gradual and careful” approach to the withdrawal of monetary policy remains appropriate.
The sources: Bank of England, Bloomberg, FT
