Bank of England Cuts Rates
This is the first easing of monetary policy since 2020
The Bank of England (BOE) has announced the first interest rate cut in four years.
“At its meeting ending July 31, 2024, the Monetary Policy Committee (MPC) voted by a 5-4 majority to cut the bank rate by 0.25 percentage points, to 5%. Four members preferred to keep the interest rate at 5.25%,” the Bank of England wrote in a statement, highlighting the fact that it was a widely discussed decision.
The Bank of England has thus acted to ease monetary policy for the first time since 2020, with rates rising from a historic low of 0.1% in December 2021 to 5.25%, maintained until the July 31 meeting. It was the highest level in 16 years.
“Twelve-month CPI (consumer price index – ed.) inflation reached the MPC’s 2% target in both May and June,” states the press release in which the institute announced the rate cut. “Inflation is expected to rise to around 2¾% in the second half of this year, as last year’s decline in year-on-year energy prices has abated, more clearly demonstrating the persistence of domestic inflationary pressures. Private sector average weekly wage growth fell to 5.6% in the three months before May, while consumer price inflation for services fell to 5.7% in June. GDP has shown sharp growth this year, but the underlying dynamics look weaker.”
