Bank cuts interest rates to 5% but signals rapid fall unlikely to come
Governor Andrew Bailey said the Bank needs to be ‘careful not to cut interest rates too quickly or by too much’.
The Bank of England has cut interest rates for the first time since 2020, but signalled people should not expect borrowing costs to start dropping rapidly in the months ahead.
The central bank reduced the base rate from 5.25% to 5% after a split vote among its policymakers.
It means pressure will be eased for some homeowners who will see their mortgage costs come down, but it could prompt banks to start reducing savings rates.
The decision marks a turning point for the Bank’s Monetary Policy Committee (MPC), which has not implemented an interest rate cut since the onset of the Covid-19 pandemic in March 2020.
Bank governor Andrew Bailey said: “Inflationary pressures have eased enough that we’ve been able to cut interest rates today.
“But we need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.”
