The Bank of England voted 5-4 to cut interest rates by 25 basis points to 4%, as expected, at its meeting just moments ago. Four members favored a 50 basis point cut, and four members preferred to keep rates unchanged.
The Bank’s interest rate report stated that inflation had declined significantly over the past two years as previous external shocks receded. This, coupled with long-term inflation stability, allowed the Committee to ease fiscal consolidation while maintaining the interest rate within the constrained range.
UK core GDP remained weak, with the labor market continuing to gradually ease, and downside geopolitical risks surrounding economic activity remain.
The Committee will continue to closely monitor inflation risks and assess the risks to the economy. A gradual and cautious approach to further easing monetary policy remains appropriate. Monetary policy has eased with the interest rate cut, and the pace of future policy cuts will depend on the extent to which underlying deflationary pressures abate.