The Bank of England is widely expected to reduce interest rates to 4% today, marking its fifth rate cut in a year, as the central bank responds to signs of a slowing UK economy despite a recent uptick in inflation.
The anticipated quarter-point cut, from 4.25% to 4%, would continue the Bank’s gradual unwinding of monetary tightening after borrowing costs peaked at 5.25% in August 2024. The decision will be announced at midday following a vote by the Bank’s Monetary Policy Committee (MPC).
The vote is expected to be close, with a predicted 5-4 split among the nine-member panel. Governor Andrew Bailey is expected to side with a majority in favour of a modest rate cut, alongside most internal committee members.
Two external members, Swati Dhingra and Alan Taylor, are thought likely to vote for a larger 0.5 percentage point cut, citing deepening economic fragility. However, Huw Pill, the Bank’s chief economist, and Catherine Mann may push for holding rates at 4.25%, concerned by the recent rise in inflation.
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