The Bank of England has cut interest rates for the first time in over four years, signaling a shift in economic strategy amid a sharply downgraded forecast for UK growth. The central bank reduced the base rate to 5%, down from 5.25%, as it grapples with slowing economic momentum and lingering global uncertainty.
Officials said the move was driven by easing inflationary pressures and a need to stimulate domestic spending, with the economy expected to grow just 0.5% this year, down from the 1% predicted earlier. The Bank warned that global trade tensions, high borrowing costs, and weakened consumer confidence continue to weigh heavily on the UK’s economic recovery.
Despite the rate cut, Governor Andrew Bailey cautioned against assuming a return to ultra-low interest rates, emphasizing the need for a “balanced and cautious” approach to monetary policy. He also noted that further adjustments would depend on upcoming data, especially on inflation and employment trends.
Analysts say the cut may provide some relief for mortgage holders and struggling businesses but could also reflect deeper concerns about the UK’s economic resilience. The central bank’s move marks a critical turning point as it seeks to balance stability with growth in an uncertain global landscape.
