Bank of England cuts interest rates for second time in 2024

The Bank of England has lowered interest rates for the second time this year, responding to a combination of economic pressures, including the UK government’s recent budget and the impact of Donald Trump's election as US president.

In a decision widely expected in financial markets, the Bank’s monetary policy committee (MPC) voted by a majority to reduce the base rate from 5% to 4.75%, News.Az reports, citing foreign media.

Some analysts had said Labour’s first budget in 14 years risked derailing progress towards lower rates by adding to inflationary pressures, with higher government spending and borrowing.

Economists have also said that Trump imposing tariffs on US imports would stoke inflation, with consequences for the global economy. But the US Federal Reserve is expected to cut rates by 0.25 points later on Thursday.

Threadneedle Street cut interest rates in August for the first time in four years, with a quarter-point reduction after a sharp decline in inflation this year. Andrew Bailey, the Bank’s governor, signalled that rates had further to fall when he told the Guardian last month that progress in the battle against inflation would allow the MPC to be more “aggressive”.

UK inflation fell below the Bank’s target of 2% in September, for the first time in three and a half years. However, the rate is expected to rise after an increase in Ofgem’s energy price cap for households in Great Britain in October.

News.Az