Bank of England cuts rates despite continual domestic price pressures

The Bank of England has today cut the base rate to 4%.

The Monetary Policy Committee was far from unanimous, as evidenced by the 5-4 split in favour of the cut. This lack of consensus captures the difficult balancing act the Bank is facing.

Inflation is well above target, with clear price pressures across the energy, food, and services categories.

However, the economy is also showing poor momentum and the labour market is weakening.

Ultimately, the latter factors have been prioritised in today’s decision. Overall, Cebr expects the Bank of England to continue its gradual approach to adjusting rates, implementing one final cut this year, before further loosening in 2026.