Bank of England Cuts Interest Rates After Fed Holds Policy
The Bank of England cut its key interest rate, a day after the Federal Reserve decided to leave interest rates unchanged, highlighting the widening divergence between the U.S. central bank and its global peers in response to President Trump’s tariffs.
The BOE’s Monetary Policy Committee lowered interest rates to 4.25% on Thursday from 4.5%, the bank’s fourth cut in seven meetings. The move brought its overall reduction in borrowing costs in line with the U.S. central bank.
While the Bank of England has eased policy more cautiously than other European central banks, it is paving the way for more aggressive measures if the impact of tariffs on growth proves more severe than anticipated.
“The Committee will remain sensitive to the heightened uncertainty in the economic environment,” the BOE said in a statement.
Two policymakers supported a larger rate cut, arguing that the BOE needs to move quickly to support the economy and ensure inflation does not fall below its target. However, two of the nine MPC members voted to leave the benchmark interest rate unchanged, citing a still-strong jobs market and higher household expectations for future price increases.
Source: Bloomberg
