BoE cuts rates to 5% in narrow vote
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The news: The Bank of England (BoE) cut interest rates by a quarter-point to 5% in the first cut since the start of the Covid pandemic in March 2020.
The context: The decision, made in a narrow 5-4 vote, reflected divided opinions about whether inflation pressures had eased sufficiently, despite headline inflation hitting the bank’s 2% target in May.
The cut ends an almost year-long period of unchanged rates, the longest at the peak of a cycle since 2001.
The numbers: Economists polled by Reuters had anticipated the BoE's move, but markets had priced only a 60% chance of a cut.
The BoE's latest forecast predicts a rise in inflation to 2.75% by late 2024 but expects a return to the 2% target by early 2026.
What they said: Governor Andrew Bailey said going forward the bank would be “careful not to cut interest rates too quickly or too much,” to ensure inflation remains controlled.
The sources: Bank of England statement, Reuters
