The Bank of England is cutting its key interest rate for the first time since the pandemic. The decision was made by a narrow margin of five votes to four.
The British central bank has initiated a turnaround in interest rates and cut the key interest rate by 0.25 percentage points for the first time since the pandemic in 2020. As the Bank of England announced on Thursday after its meeting, the key interest rate is now 5.0 percent. The decision of the responsible committee was extremely close: five members voted for the reduction, four wanted to keep the key interest rate stable.
“Inflationary pressures have eased sufficiently that we are in a position to cut interest rates today,” said the head of the British central bank, Andrew Bailey. At the same time, he wants to remain cautious and not cut interest rates too much or too quickly.
In the fight against inflation, the central bank had raised interest rates a total of 14 times since the end of 2021, most recently in the second half of 2023. The value of 5.25 percent was the highest in 16 years. Inflation in the UK remained at the target of 2.0 percent in June, lower than in the euro area, where it rose to 2.6 percent in July.
Other central banks, including the European Central Bank, have also begun to lower key interest rates again.
