Still, the MPC signalled a “gradual and careful approach” to future rate cuts, suggesting in their forecasts that only two more reductions were needed to bring inflation back to the 2% target. Policymakers also dealt a blow to Chancellor of the Exchequer Rachel Reeves, warning that inflation would rise “quite sharply” to peak at 3.7% later this year — compared with a projection of 2.8% in November — and downgraded growth forecasts.
Bank of England officials decided to cut interest rates to a 19-month low, with two supporting a bumper 50-basis-point cut, prompting markets to boost bets on further easing.
The nine-member Monetary Policy Committee lowered the bank’s benchmark rate by a quarter point to 4.5%, the third such reduction since August. Two external policymakers — Swati Dhingra and Catherine Mann, who has been one of the panel’s most hawkish voices — wanted a half-point cut, while Governor Andrew Bailey and the others supported a smaller move.
