Bank votes to cut borrowing costs but also slashes short-term growth forecasts
The Bank of England has cut the interest rate from 4.75 per cent to 4.5 per cent in its monthly announcement, but has slashed short-term growth forecasts for the economy.
Governor Andrew Bailey said the cut would be “welcome news to many” but that the Bank was “monitoring the UK economy and global developments very closely, and taking a gradual and careful approach to reducing rates further”.
The base rate helps dictate the cost of borrowing such as taking out a mortgage, with some products, particularly tracker mortgages, following it.
But after the rate rose as high as 5.25 per cent in late 2023, there is an indication it will continue to fall, especially after inflation unexpectedly fell to 2.5 per cent in December.
With economic growth stagnating across the UK, many believe the Bank will make another interest rate cut to encourage more spending and stimulate the economy.