The Bank of England trimmed the base rate by a quarter-point to 5%. This marked the first rate cut by the UK’s central bank since March 2020.
Within the Bank of England, the rate cut decision was somewhat contentious, with the Monetary Policy Committee voting 5-4 for the rate cut – the dissenting voters sought to maintain the 5.25% rate, which had been the highest level achieved since the 2008 financial crisis.
“Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further,” said the central bank in a statement. “The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.”
The Bank of England’s rate cut comes one day after the Federal Reserve opted to hold rates and one week after the Bank of Canada enacted its second consecutive rate cut.
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