Bank of England cuts rates to 4%, but outlook remains unclear
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The Bank of England’s Monetary Policy Committee (MPC) cut rates by 0.25% today, to 4.0%, which was heavily anticipated by investors. The MPC was split, with the vote tighter than expected, with 5 members voting for a 0.25% cut and 4 opting for no change.
Anais Caldwell-Jones, Principal in LCP’s investment team, commented:
“The Bank of England’s decision to cut rates to 4% reflects the MPC’s attempt to ease financial conditions, against the backdrop of a weaker labour market and economic contractions in April and May. However, with inflation at 3.6%, well above the 2% target, the Bank is likely to maintain a cautious approach to further cuts.”
She added:
“Today’s outcome underscores the MPC’s delicate balancing act, offering modest support to the economy while reinforcing their ’gradual and careful’ message. The MPC finds itself trying to navigate through an undesirable mix of weak growth and stubborn price pressures.”
