Bank of England cuts interest rates for first time in over four years

The Bank of England on Thursday delivered its first interest rate cut in more than four years، taking the key rate to 5%.

Policymakers ultimately voted 5-4 in favor of the reduction، with Governor Andrew Bailey saying that the committee would move ahead cautiously. The Bank rate had been held at a 16-year high of 5.25% since August 2023.

A lack of clear signaling from the British central bank had shrouded the decision in uncertainty until the last minute، even as markets priced in a 61% probability of a 25-basis-point reduction of its key rate at the August meeting as of 8:15 a.m. in London.

The BOE typically provides less forward guidance than some other central banks، and its communication was especially restricted in the recent six-week period because of the U.K. general election that took place in early July.

The Bank of England also on Thursday released its quarterly Monetary Policy Report، which contained economic growth and inflation projections. The Monetary Policy Committee will next meet to deliberate policy steps on Sept. 19، with two more meetings penciled in for November and December this year.