OR Bank of England (Boe) reduced the interest rates From 4.25% to 4% today (7.8.2025), as the Central Bank returns to a “gradual and careful” approach to reducing interest rates.
The Bank of England was widely expected to reduce interest rates by 25 basis points at the last monetary policy meeting, but investors and economists were willing to see the allocation of support for the decision between the bank’s policy makers.
As it turned out on Thursday, nine members of the Monetary Policy (MPC) voted by a majority of 5 – 4 to reduce the basic interest rate, the “Bank Rate” by 25 basis points, rather than maintaining it unchanged.
Policy formulators had to weigh persistent inflation, the consumer price index increased to a higher than expected 3.6% in June from 3.4% in May, with the decline in the labor market and hypotonic growth. The UK’s gross domestic product shrunk 0.1% on a monthly basis in May.
Despite the divergent views of Boe’s policy managers, economists expect that the downward trend will continue next year.
Jack Meaning, a Barclays leading economist for the United Kingdom, said before the last policy session that it expects the Bank of England to continue its gradual quarterly reductions by 25 basis points until the main interest rate, Bank Rate, reaching 3.5%.
Ashley Webb, Capital Economics economist for the United Kingdom, predicted that the Central Bank could even more relax its monetary policy.
“Despite the unexpected increase in the inflation of the CPA in June, we still believe that the inability to market labor means it is only a matter of time before wage increases and inflation slows down to 2%inflationary levels.
We believe that the Bank of England will reduce interest rates from 4.25% today to 3% in 2026, which will drive interest rates below the low level of 3.50% priced in financial markets, “he said in a note Wednesday (6.8.2025).