Bank of England Cuts Interest Rates Amid Economic Uncertainty

The Bank of England has reduced its base interest rate from 4.75% to 4.5%, marking the third cut in six months amid concerns over sluggish economic growth and rising inflation. The decision, made by a 7-2 vote within the Monetary Policy Committee, comes as the Bank also lowers its growth forecast for the UK from 1.5% to 0.75%, raising fears of stagflation. Governor Andrew Bailey noted the necessity to support economic activity despite inflation risks, which are projected to rise to 3.7% by autumn. The rate cut is expected to benefit around 629,000 households with tracker mortgages, although the overall economic outlook remains uncertain. Market reactions have been mixed, with the pound initially falling before recovering slightly, as investors remain cautious about the potential impacts of global trade policies and economic tensions. Analysts suggest that the ongoing economic challenges indicate a need for careful navigation by policymakers and businesses alike.