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The Bank of England has today announced a cut to interest rates for the first time since 2020, taking the base rate from 5.25% to 5%.
The bank’s monetary policy committee said Thursday members had voted 5-4 to cut rates, and said high interest rates had helped return inflation to target, but it would not cut too quickly in future as inflation may rise again temporarily.
Inflation fell back to 2% in May and June in the UK following spiralling prices on the back of the war in Ukraine and the global pandemic.
Inflation is expected to rise once again to 2.75% this year, the bank said, but is expected to return to 2% in 2025.
The interest rate cut will come as a relief to UK borrowers, including UK mortgage holders, who have seen rates on their home loans during their interest rate hiking cycle squeeze household budgets.
(Writing by Imogen Lillywhite; editing by Daniel Luiz)
