UK Cuts Base Interest Rate Again After 3 Months…4.25→4.00%

JOON HYOUNG LEE

Summary

The United Kingdom's central bank has announced a 0.25 percentage point cut in the base interest rate from 4.25% to 4.00% after three months.
This interest rate cut matches market analysts’ expectations, with 5 out of 9 Monetary Policy Committee members voting in favor.
The Bank of England emphasized in its statement that a gradual and cautious approach to interest rate cuts remains appropriate.

The United Kingdom's central bank has lowered its base interest rate again after three months.

The Bank of England (BOE) convened its Monetary Policy Committee on the 7th (local time) and cut the base interest rate by 0.25 percentage points, from an annual 4.25% to 4.00%. This matches the outlook of market experts polled by Reuters.

Specifically, out of the 9 members of the Monetary Policy Committee, 5 supported the 0.25 percentage point reduction, while the remaining 4 advocated for holding the rate steady. The vote was unusual, requiring two rounds as there were four votes for a 0.25 percentage point cut, one for a 0.5 percentage point cut, and four to hold. A decision was made to lower the rate after the second vote.

This marks the fifth base rate cut by the United Kingdom since last August. The Bank of England has lowered the base interest rate, which peaked at a 16-year high of 5.25%, by 0.25 percentage points on five occasions—in August and November last year, and in February, May, and again this month.

The annual 4.00% base rate is the lowest since March 2023. The Bank of England stated, "A gradual and cautious approach (to interest rate cuts) remains appropriate."

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