Bank of England set for second cut after Labour reveals tax-hiking budget
CNBCNOV 20 2024
The Bank of England (BoE) Thursday cut interest rates to 4.75% — down 0.25 points. This is the second interest rate cut by the BoE this year.
The BoE's monetary report summary said this cut, which passed by an 8-1 vote by the Monetary Policy Committee (MPC), was based upon "continued progress in disinflation" — citing in particular "abated" external shocks.
Previously, the BoE in August began cutting interest rates from a 16-year high of 5.25%. The rates had risen 14 consecutive times between Mar. 2020 and Dec. 2021, as inflation hit a peak of 11.1% in Oct. 2022.
TheThis BoE's decision toshows cutconfidence interestin ratesChancellor after last week's budget is a sign of confidencethe inExchequer Rachel Reeves's pro-growth economic plan. WhilstWhile some will inevitably complain, and it is a well-known fact that the UK economy is in dire need of substantial overhaul, the Labour Governmentgovernment has taken theits first steps in leading the country back in the right direction and will only benefit from another interest rate cut.
The BoE's analysis is clear: although good progress has been made to reduce inflation, but Reeves's high cost agenda is at risk of undoing the hard work of the last two years. Given Labour's spending obsession, it is likely now that Bailey and the BoE will have to slow down interest rate cuts even further, placing greater financial pain onto millions of homeowners and working people who have been promised financial relief.