Bank of England cuts interest rates to 5% in first reduction since March 2020
The Bank of England has cut interest rates for the first time since the start of the Covid pandemic, easing some pressure on households and businesses struggling in the cost of living crisis.
In a decision that financial markets had expected to be a close call, the central bank’s monetary policy committee voted by a majority to trim the base rate by a quarter-point to 5%.
It is the first reduction in borrowing costs since the Bank began ratcheting up interest rates from a record low of 0.1% in December 2021 to 5.25%, their highest level since before they were slashed in the 2008 financial crisis.
It comes after headline inflation held at the Bank’s 2% target for a second consecutive month in June, having fallen from a peak of 11.1% in October 2022 after the Russian invasion of Ukraine triggered a rise in energy prices.
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