Bank of England Cuts Interest Rates to 4.75%
Bank of England Cuts Interest Rates to 4.75%
The Facts
The BoE has estimated that, following Labour's budget last week, inflation will increase by 0.5 points at its peak, compared to previous forecasts, and GDP growth will also be raised by 0.75 points at its peak. Following the BoE decision, the pound sterling saw a 0.10 point increase on the euro and a 0.70 point rise against the US dollar.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 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 Spin
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 a 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 on millions of homeowners and working people.