BANK OF ENGLAND’S DECIDED TO CUT INTEREST RATES TO 4.75% FROM 5% – Reeves said families and business owners would benefit from the rate cut.
Rachel Reeves welcomed the Bank of England’s decision to cut interest rates to 4.75% from 5%. The Bank of England cut interest rates for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the British government’s first budget would lead to higher inflation and economic growth.
Reeves said families and business owners would benefit from the rate cut. Last week’s budget set by Reeves, with its heavy borrowing and spending, prompted investors to dial back their bets on the pace of further rate cuts.
The Bank of England’s governor Andrew Bailey said he did not think that path would be “particularly different” due to the budget.
The BoE said the government’s plans were likely to add almost half a percentage point to inflation at its peak in just over two years’ time and cause it to take a year longer to return sustainably to the central bank’s 2% target.
The budget would also boost the size of Britain’s economy by about 0.75% next year but barely improve annual growth rates in two or three years’ time, the BoE said.
