Bank of England cuts interest rates to 4.25% amid divided MPC vote

The Bank of England cuts interest rates by 0.25%

On Thursday the bank of England voted to cut interest rates by 0.25%, bringing the base rate down to 4.25%. This is now a full one percent fall from the recent high in 2023-2024 when the bank was combatting double digit inflation. Although inflation has come down from its highs it is still above the target 2%. Whilst the cut on Thursday was expected what was unexpected was the split of the vote. Of the 9 Monetary Policy Committee (MPC) members two voted to keep rates unchanged, five voted for the 0.25% cut and, perhaps most surprisingly, 2 voted for a 0.5% cut.

This split in the vote shows there is a fair amount of uncertainty with fears of sticky inflation – possibly boosted by President Trump’s ‘Liberation Day’ tariff regime – battling fears of an economic slowdown.

The cut will be a relief to borrowers, especially those with tracker or variable rate mortgages. However, as we are now five years on from the pandemic-era low interest rates those borrows rolling off of a fixed rate offer struck then will still be seeing rates at materially higher levels.