The Bank of England reduces interest rates by quarter to 4 %

The Bank of England voted with a good margin to reduce interest rates from 4.25 % to 4 % on Thursday, as the central bank resumed what it describes as a “gradual and accurate” approach to cash dilution.

It was widely expected that the Bank of England would trim prices by 25 basis points in its last monetary policy meeting, but merchants and economists were keen to see the collapse of support for the decision between policy makers in the bank.

As it turned out on Thursday, MPC voted from nine members by a 5-4 majority to reduce the main interest rate, the “bank price”, by 25 basis points instead of keeping it. The British pound rose 0.5 % against the dollar after the decision, to $ 1.3424.

Policy makers had to weigh the sticky inflation – The Consumer Prices Index (CPI) rose to 3.6 % more hot in June From 3.4 % in May – With a cooling job market And dull growth. GDP in the United Kingdom I contracted 0.1 % on a month in May.

In a statement ThursdayThe bank said that MPC “still focuses on pressing any ongoing or emerging inflationary pressure, to re -inflation into a 2 % goal in the medium term.”

MPC was initially divided into a reduction or detention of interest rates with four members who want to keep prices, and four others vote to reduce and vote for a vote to reduce more than 50 Basis. Then the committee held a second round of voting to reach the majority decision to reduce prices by 25 basis points.

The vote is a reflection of the “accurate balanced situation” currently facing MPC in terms of factors that drive monetary policy, according to the ruler of England Bank Andrew Billy.

“There is a risk to inflation, especially if … this current increase can continue more than we expect to expect it in reality, but can I be?” Billy Retica Gopta told CNBC in an interview. “But … this must be set in the context of the conditions of the labor market, which seems to be softened.”

Despite the varying views of Policy makers at the Bank of England, economists expect that the downward path of interest rates will continue next year, but the central bank has repeated its caution, noting that “a gradual and accurate approach to further withdrawal to control monetary policy is still appropriate.”

Banque Box said that the timing and speed of future discounts in restricting policy depends on the continued reduction of the amplitude behind it.

“It is still important that the bank rate is not very quickly or a lot,” Billy said at a press conference on Thursday.

The UK Chancellor Rachel Reeves said that reducing the fifth interest rates of the Central Bank since the last general elections in July 2024 were “welcome news, as it helped reduce the cost of real estate loans and loans for families and companies.”

George Brown, the leading economists in Sherdes, said that the latest price reduction was not surprising, but he said, “The path forward is not clear.”

“Jobs, growth and numbers are all numbers require different political recipes, as shown in two unprecedented rounds of the voting needed to reach the majority,” he said in the comments on Thursday.

“Given the uncertainty that conflicting data provided, the committee is right to adhere to its” gradual and caution, “adding:” Nervousness around the labor market may lead to another reduction in November. It will be difficult to justify unless the inflation is clear.

Some economists believe that the central bank can go further.

“Despite the unexpected rise in the consumer price index in June, we still believe that the weakness in the labor market means that it is a matter of time only before wages and inflation are slow in inflation rates by 2 %,” said Ashley Web, UK economist in economics at Capital Economics.

“We believe that the Bank of England will reduce interest rates from 4.25 % to 3.00 % in 2026, which will take prices lower than 3.50 % in financial markets,” he said on Wednesday.