Bank of England set for second cut after Labour reveals tax-hiking budget
CNBCNov 04, 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 Bank of England (BoE) cut interest rates to 4.75% Thursday — a 0.25 decrease. 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.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.The BoE began cutting interest rates from a 16-year high of 5.25% in August. The rates had risen 14 consecutive times between March 2020 and December 2021, as inflation hit a peak of 11.1% in October 2022.
This decision shows confidence in Chancellor of the Exchequer Rachel Reeves's pro-growth economic plan. While some will inevitably complain, and the UK economy is in dire need of substantial overhaul, the Labour government has taken its 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: 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 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.