The Bank of England has cut the base rate to 4%, reflecting a 5-4 split decision by the Monetary Policy Committee. This illustrates the conflicting pressures the Bank faces, with inflation remaining above target alongside weakening economic momentum and labor market issues. The decision prioritized these economic challenges, suggesting a cautious and gradual approach moving forward. The Centre for Economics and Business Research anticipates one additional rate cut this year, with further easing expected by 2026.
The Bank of England has today cut the base rate to 4%. The Monetary Policy Committee was far from unanimous, as evidenced by the 5-4 split in favour of the cut.
Inflation is well above target, with clear price pressures across the energy, food, and services categories. However, the economy is also showing poor momentum and the labour market is weakening.
Ultimately, the latter factors have been prioritised in today's decision. Overall, Cebr expects the Bank of England to continue its gradual approach to adjusting rates.
Cebr expects one final cut this year, before further loosening in 2026.
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