BusinessPostCorner.com
No Result
View All Result
Sunday, June 1, 2025
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources
BusinessPostCorner.com
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources
No Result
View All Result
BusinessPostCorner.com
No Result
View All Result

Bank of England cuts interest rates by a quarter point to 4.25%

May 8, 2025
in Finance
Reading Time: 3 mins read
A A
0
Bank of England cuts interest rates by a quarter point to 4.25%
ShareShareShareShareShare

Stay informed with free updates

Simply sign up to the UK interest rates myFT Digest — delivered directly to your inbox.

The Bank of England has cut interest rates by a quarter point to 4.25 per cent but stressed it was not on a preset path to further reductions, as it prepares for the impact of US President Donald Trump’s trade policy.

The BoE’s Monetary Policy Committee was split three ways over the decision, in a decision that came ahead of the announcement of a US-UK trade deal that London expects will limit the tariff hit on British exports.

While Thursday’s quarter-point cut had been expected, the MPC’s insistence that it would retain “a gradual and careful approach” to additional rate reductions prompted traders to trim their bets on further rate cuts this year.

“Interest rates are not on autopilot — they cannot be,” said Andrew Bailey, the BoE governor.

Traders are now pricing in two further rate cuts this year, with a roughly 30 per cent chance of a third — down from 80 per cent before the meeting, according to levels implied by swaps markets.

“This is a more divided MPC,” said Sanjay Raja, chief UK economist at Deutsche Bank. “The probability of sequential back-to-back rate cuts should drop on the back of this.”

Although a majority of five MPC members supported the quarter-point cut, two favoured a bigger, half-point reduction and two wanted rates to stay at 4.5 per cent.

“Overall, it’s a hawkish surprise,” said Francesco Pesole, an FX strategist at ING, highlighting that BoE chief economist Huw Pill was among those voting for no change.

The pound rose above $1.33 after the vote, putting it in positive territory for the day.

The yield on two-year gilt, which moves inversely to price and reflects interest rate expectations, was up 0.09 percentage points at 3.90 per cent.

The BoE has been contending with the impact on prices and economic activity of the £40bn of tax increases chancellor Rachel Reeves announced in October’s Budget, as well as the uncertainty produced by Trump’s tariff plans.

The central bank also faces the prospect of inflation rising in the coming months, partly driven by an increase in household bills. In a new set of forecasts released on Thursday, the BoE predicted that inflation would peak at 3.5 per cent in the third quarter before returning to the central bank’s 2 per cent target in 2027.

This week’s meeting was the first since Trump’s announcement last month of global tariffs, which the BoE said had helped weaken prospects for global growth — although it added that “the negative impacts on UK growth and inflation are likely to be smaller”.

Ahead of Thursday’s trade announcement by the US and UK, Bailey said a deal was “welcome” news. “It will help to reduce uncertainty, and that’s important,” he said.

Recommended

The BoE said underlying UK GDP growth had slowed since mid-2024, forecasting that the economy will expand by 1 per cent this year and by a weaker than expected 1.25 per cent in 2026. 

The BoE’s new forecast assumes that Trump’s so-called reciprocal tariffs on countries around the world will remain suspended after the current 90-day hiatus but that the high barriers between the US and China will persist.

It said it expected the global trade tensions to reduce the level of UK GDP by just 0.3 per cent in three years’ time, a relatively small impact.

The BoE’s forecasts are based on market expectations showing its key rate will fall to just over 3.5 per cent in 2026 — a steeper path for rate cuts than was built into the BoE’s February forecasting round.

Bailey voted with the group advocating a quarter-point reduction, while two external members — Swati Dhingra and Alan Taylor — sought an even bigger half-point cut.

In calling for rates to stay at 4.5 per cent, Pill and external MPC member Catherine Mann cited concerns about “inflation persistence” alongside a resilient labour market and higher household inflation expectations.

Credit: Source link

ShareTweetSendPinShare
Previous Post

From Apple to GM, tariffs to cost companies tens of billions

Next Post

Apple hits back at US judge’s ‘extraordinary’ contempt order

Next Post
Apple hits back at US judge’s ‘extraordinary’ contempt order

Apple hits back at US judge's 'extraordinary' contempt order

What will it look like for orgs?

What will it look like for orgs?

May 30, 2025
The fellowship: how Trump loyalists are taking over the US state department

The fellowship: how Trump loyalists are taking over the US state department

May 25, 2025
Video is vital to ecommerce marketing — here’s what marketers need to know

Video is vital to ecommerce marketing — here’s what marketers need to know

May 28, 2025
KPI dashboards & how to use them in your marketing

KPI dashboards & how to use them in your marketing

May 30, 2025
Chainlink’s B Bombshell: Analysts Warn $LINK Could Explode 133% to .5

Chainlink’s $66B Bombshell: Analysts Warn $LINK Could Explode 133% to $36.5

May 26, 2025
EU plans to ‘fast track’ trade talks with US amid tariff fight

EU plans to ‘fast track’ trade talks with US amid tariff fight

May 26, 2025
BusinessPostCorner.com

BusinessPostCorner.com is an online news portal that aims to share the latest news about following topics: Accounting, Tax, Business, Finance, Crypto, Management, Human resources and Marketing. Feel free to get in touch with us!

Recent News

Bitcoin Price Prediction: 4K – BTC Price Correction or Breakout Reloading?

Bitcoin Price Prediction: $104K – BTC Price Correction or Breakout Reloading?

June 1, 2025
Fixed-wing flying car nears production, bringing ‘Jetsons’ future a step closer

Fixed-wing flying car nears production, bringing ‘Jetsons’ future a step closer

June 1, 2025

Our Newsletter!

Loading
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2023 businesspostcorner.com - All Rights Reserved!

No Result
View All Result
  • Home
  • Business
  • Finance
  • Accounting
  • Tax
  • Management
  • Marketing
  • Crypto News
  • Human Resources

© 2023 businesspostcorner.com - All Rights Reserved!