Bank of England Breaks Tightening Streak With First Rate Cut Since 2023
The Bank of England has delivered a long-anticipated interest rate cut, marking a clear turning point in its monetary policy stance after more than a year of restrictive settings.
Policymakers voted to reduce the benchmark rate by 25 basis points, bringing it down to 3.75%, the lowest level since February 2023.
The decision reflects growing confidence inside the Monetary Policy Committee that inflation pressures are easing and that tight financial conditions are no longer necessary at previous levels. Markets had broadly priced in the move, but the accompanying guidance has drawn even more attention than the cut itself.
In its statement, the Bank of England signaled that borrowing costs are likely to continue drifting lower over time, emphasizing a “gradual downward path” rather than aggressive easing.
Officials stressed that future decisions will remain data-dependent, but the tone suggested that the peak of the rate cycle is now firmly behind the UK economy.
This shift comes as economic momentum remains fragile, with households and businesses still feeling the effects of elevated borrowing costs. By easing policy cautiously, the central bank aims to support growth without reigniting inflation risks, a balance that has proven difficult over the past two years.
The move also aligns the Bank of England more closely with other major central banks that have started or are preparing to ease policy after extended tightening campaigns.
While no specific timetable for further cuts was outlined, investors are now recalibrating expectations for additional reductions in the months ahead.
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