2025.05.0812:05:00UTC+00BoE Cuts Key Rate To 4.25% In Three-Way Split

Policymakers of the Bank of England decided to reduce its interest rate by 25 basis points in a three-way split.

The Monetary Policy Committee lowered the bank rate to 4.25 percent, as widely expected, on Thursday.

Five members of the MPC voted in favor of 25 basis point reduction and two members sought a bigger 50 basis point cut. Another two members preferred to hold the bank rate at 4.50 percent.

A gradual and careful approach to the further withdrawal of monetary policy restraint remains appropriate, the bank said.

Policymakers noted that changes in global trade policies will impact the economy. Developments in global trade are likely to reduce UK activity and create further risks to the downside.

The committee governed by Andrew Bailey said the progress made on reducing inflationary pressures helped to cut interest rates again.

Due to increases in energy prices, inflation is likely to rise to 3.7 percent by September, the bank said. Although inflation will increase temporarily, it will fall back to the 2 percent target this year, policymakers observed. In order to ensure that inflation stays low, the MPC said it will judge carefully how far and how fast interest rates should be cut.