Bank of England cuts interest rates for first time since pandemic began

Monetary Policy Committee votes 5-4 in favour of 0.25% reduction to 1.25%

Move comes as cost-of-living crisis deepens

The Bank of England has cut interest rates for the first time since the start of the pandemic. The Monetary Policy Committee (MPC) voted 5-4 in favour of reducing the base rate from 1.5% to 1.25%.

The move comes as the cost-of-living crisis deepens, with inflation hitting a 40-year high of 9.4% in June. The MPC said it was "very concerned" about the impact of rising prices on households and businesses.

The rate cut is designed to help stimulate economic growth by making it cheaper for businesses to borrow money and invest. However, the MPC warned that the outlook for the UK economy remains "uncertain" and that further rate cuts may be needed in the future.

Key points

• The Bank of England has cut interest rates for the first time since the start of the pandemic.
• The MPC voted 5-4 in favour of reducing the base rate from 1.5% to 1.25%.
• The move comes as the cost-of-living crisis deepens, with inflation hitting a 40-year high of 9.4% in June.
• The MPC said it was "very concerned" about the impact of rising prices on households and businesses.
• The rate cut is designed to help stimulate economic growth by making it cheaper for businesses to borrow money and invest.
• However, the MPC warned that the outlook for the UK economy remains "uncertain" and that further rate cuts may be needed in the future.

Conclusion

The Bank of England's decision to cut interest rates is a sign that the UK economy is facing significant challenges. The cost-of-living crisis is putting a strain on households and businesses, and the outlook for the economy remains uncertain.

The rate cut is a welcome move that will help to ease the pressure on businesses and consumers. However, it is important to remember that interest rates are only one tool that the Bank of England can use to manage the economy. The government must also take action to address the underlying causes of the cost-of-living crisis.