The Bank of England finally cuts interest rates

The Bank of England has just announced a rate cut of 0.25 percentage points, reducing the base rate from 5.25 per cent to 5 per cent. The tight decision – voted 5-4 by the Monetary Policy Committee – is the first reduction in rates since March 2020. It starts what is likely to be a slow and steady process of reducing the base rate, and marks the end of the inflation crisis, which saw Threadneedle Street hike rates from the floor to a 16-year high over the course of twenty months.

Financial markets were cautiously expecting a rate cut, but the decision was thought to be on a knife-edge. It turns out it was: the rate cut is small and the decision was close, with four members of the MPC voting to maintain the base rate.