The Bank of England has decided to cut the base rate from 4.75% to 4.5% amid slow economic growth and global trade uncertainty.
Rate Cut and UK Economic Situation
The decision was made by the Monetary Policy Committee amidst sluggish economic growth and rising concerns about global trade. The Bank anticipates that the UK economy will narrowly avoid a recession until 2025, but GDP growth is expected to be lower at 0.75%. Unemployment is projected to be just under 5% over the next two years, putting pressure on the labor market.
US Trade Policy Impact
The level of uncertainty around US President Donald Trump’s trade policies also causes concern among UK policymakers. The potential introduction of new tariffs could impact the Bank of England’s economic outlook.
Comments from Bank of England Officials
Bank of England Governor Andrew Bailey urged businesses to act cautiously. UK Chancellor Rachel Reeves supported the rate cut decision, emphasizing its potential benefits for households and businesses. She noted that the cut will help ease cost-of-living pressures and improve business financing access.
In the face of slowing economic growth and rising inflation, the interest rate cut is a crucial step to support the UK economy. However, economic prospects remain challenging and will require further action.
