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The Bank of England on Thursday lowered interest rates, as expected, although the vote make-up was more hawkish than predicted. The BoE’s Monetary Policy Committee voted 5-4 for the widely expected quarter point cut which takes bank rate to 4.25% from 4.50%. The vote split was more divided than expected. Two members, Swati Dhingra and Alan Taylor, pressed the case for a larger 50 basis points cut, but two members, Catherine Mann and Huw Pill, preferred to keep rates unchanged. Most economists had expected all MPC members to support a reduction in rates. In a statement, the BoE said ‘a gradual and careful approach’ to the further withdrawal of monetary policy restraint ‘remains appropriate’. ‘Monetary policy is not on a pre-set path. The Committee will remain sensitive to heightened unpredictability in the economic environment and will continue to update its assessment of risks,’ the statement said. The statement noted uncertainty surrounding global trade policies has intensified and the outlook for global growth weakened. ‘Uncertainty surrounding global trade policies has intensified since the imposition of tariffs by the United States and the measures taken in response by some of its trading partners. There has subsequently been volatility in financial markets, and market-implied policy rates have moved lower. Prospects for global growth have weakened as a result of this uncertainty and new tariff announcements, although the negative impacts on UK growth and inflation are likely to be smaller,’ the statement said. The BoE noted progress on disinflation but expects increases in energy prices to drive up CPI inflation from April onwards, to 3.5% in the third quarter. Sterling climbed after the decision, trading at $1.3315 compared with $1.3294 shortly before the decision. The FTSE 100 pared its gains after the decision, trading up 26 points compared to 40 points before. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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