The Bank of England has cut interest rates by another quarter percentage point, bringing down the cost of borrowing to 4.5%.
And in a sign that households can expect more cuts in the months to come, two members of the Bank‘s Monetary Policy Committee said they would have preferred to reduce rates even more, by a full half percentage point.
Follow live reaction to interest rate cut in the Money blog
However, the Bank slashed its forecast for economic growth, forecasting that the economy will skirt clear of a formal recession only by the narrowest margin in the coming months, and downgraded its estimate of the economy’s ability to generate income. And in a further blow to the chancellor, it said her latest growth plans, unveiled in a speech last week, will add nothing to gross domestic product growth in its forecast horizon.
The Bank’s governor, Andrew Bailey, said: “It will be welcome news that we have been able to cut interest rates again today. We’ll be monitoring the UK economy and global developments very closely and taking a gradual and careful approach to reducing rates further.
“Low and stable inflation is the foundation of a healthy economy and it’s the Bank of England’s job to ensure that.”
Please use Chrome browser for a more accessible video player
UK interest rate cut to 4.5%
Financial market data later showed that investors were expecting a total of four rate cuts this year, largely as a result of the weaker growth outlook.
Mr Bailey told Sky News: “Look, we don’t endorse a path of interest rates. We’ve used the words gradual and careful to describe our future policy, sort of in a sense ‘stance,’ if you like, for very good reasons.
“One is because we’ve got to see the evidence…
