The Bank of England (BoE) cut its key interest rate on Thursday by 25 basis points to 4.75%, signaling further reductions as UK inflation dropped to a three-year low of 1.7%. This is the BoE’s second rate cut since August, and follows a trend among major central banks in easing borrowing costs after hikes to curb post-pandemic inflation and the impacts of Russia’s Ukraine invasion.
Governor Andrew Bailey said that with inflation below the BoE’s 2% target, there was room for further rate cuts, though caution is needed. "We must ensure inflation remains close to target, so cuts can’t be too rapid or large," he stated, suggesting rates may decrease gradually if the economy aligns with the BoE’s expectations.
The move follows last week’s budget from the new Labour government, which included tax hikes and increased borrowing. The BoE had previously raised interest rates 14 times since late 2021, starting from a record-low 0.1%, until inflation began stabilizing this year.
Meanwhile, Sweden’s central bank cut rates by 0.5 basis points—the largest reduction in a decade—while Norway held rates steady. The U.S. Federal Reserve is also expected to lower rates by 25 basis points, though analysts say the decision is likely unrelated to Donald Trump’s return to power.
Source: Eastern Eye/ AFP
Bd-pratidin English/ Jisan
