Bank of England Cuts Interest Rate to 4.5% to Boost Economy Amid Slowdown and Inflation Concerns.

On February 6, 2025, the Bank of England (BoE) released its Monetary Policy Report and Monetary Policy Summary. The Monetary Policy Committee (MPC) decided to cut the official bank rate by 0.25% to 4.5%.

MPC Official Bank Rate Votes:
- 7 members voted to cut the rate by 0.25% to 4.5%.
- 2 members voted for a 0.50% rate cut to 4.25%.

Monetary Policy Summary:
This marks the third rate cut since August 2024, aimed at supporting economic growth amid slowing economic activity and persistent inflation concerns.

- The BoE expects inflation to rise to 3.7% in Q3 2025 before returning to the 2% target in Q4 2027.
- The BoE's decision highlights efforts to balance economic growth support and inflation control. GDP growth for 2025 is now projected at 0.75%, down from the previous forecast of 1.5%.

Impact on Borrowers and Savers:
- Borrowers may benefit from lower loan repayment costs.
- Savers may see reduced returns on deposits due to the rate cut.
This decision reflects the BoE’s commitment to supporting the economy amid increasing challenges while managing inflation expectations.