BANK of England’s BOLD Rate CUT: What It Means for YOU
— The Bank of England plans to cut interest rates for the third time in six months, even though inflation is still above target. Economists expect a quarter-point reduction, lowering the rate to 4.50%. This move aims to tackle economic stagnation and job losses.
Interest rates affect mortgage and loan costs and influence savings returns from banks. Financial markets are closely watching the bank’s forecasts and Governor Andrew Bailey’s remarks during his press conference.
Andrew Wishart from Berenberg Bank says urgent action is needed due to economic stagnation. The Monetary Policy Committee targets a 2% inflation rate over the next few years, despite current inflation at 2.5%.
Inflation recently dropped unexpectedly to 2.5%, mainly because of easing price pressures in services, which dominate the U.K.'s economy. Although short-term rises are expected due to business tax hikes by the Labour government, economists predict a downward trend towards target levels, supporting further rate cuts.