Bank of England Cuts Base Rate to 5% for First Time Since 2020

The Bank of England has decreased its base interest rate by 0.25 percentage points to 5%, marking the first cut since March 2020. This reduction follows a year of maintaining rates at 5.25%, the highest level since the 2008 financial crisis. The decision was made by a narrow 5-4 vote by the Monetary Policy Committee (MPC), with Governor Andrew Bailey casting the deciding vote. The cut was justified by a perceived easing of inflationary pressures.

The reduction is expected to benefit homeowners with tracker mortgages, leading to an average decrease of £32 in their monthly payments. Those with fixed-rate mortgages will not experience immediate changes. Interest rates on credit cards and personal loans, which may be influenced by changes in the base rate, could see adjustments over time. Rates on savings accounts might also be affected, with some institutions potentially lowering their rates following the cut. Current rates on loans and credit cards remain elevated compared to historical norms.

This rate cut reflects a cautious adjustment in monetary policy. The Bank of England has indicated that future rate changes may be gradual and carefully considered. Analysts anticipate that the central bank will continue to monitor inflation closely and may avoid large or rapid rate reductions to prevent destabilizing inflation expectations. This approach is consistent with a broader trend among major central banks to cautiously adjust restrictive monetary policies. Future decisions will be guided by ongoing economic developments and inflation trends.

https://www.independent.co.uk/news/uk/home-news/unemployment-rate-uk-ons-latest-news-b2544588.html
https://www.theguardian.com/business/article/2024/aug/01/bank-of-england-cuts-interest-rates
https://www.mirror.co.uk/money/breaking-bank-england-finally-cuts-33373229

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