Bank of England Cuts Rates to 4.25% Amid Inflation Concerns

Economists at Wells Fargo predict the US dollar will weaken against most currencies through the end of 2025 due to anticipated Federal Reserve rate cuts, but expect the dollar to regain strength in 2026 as rate cuts end and fiscal stimulus supports growth. In the UK, the Bank of England cut its base interest rate from 4.25% to 4% after an unprecedented second round of voting, reflecting divided committee opinions and concerns about persistent inflation. Despite the cut, experts warn that mortgage rates are unlikely to fall significantly in the near term, as lenders have already priced in the reduction and further cuts remain uncertain. Commentary highlights that while the rate cut offers some relief to borrowers, inflation fears and economic challenges mean the outlook remains cautious, with risks of future rate increases and fiscal pressures. The Bank’s decision was influenced more by inflation concerns than optimism about economic recovery, with political and economic debates ongoing about the best path to sustained growth. Overall, both US and UK monetary policies are navigating complex trade-offs between supporting growth and managing inflation risks.