Bank of England Cuts Interest Rate to 4.25% Amid Economic Uncertainty

The Bank of England has cut its main interest rate by 0.25 percentage points to 4.25%, citing uncertainty and economic drag from new US tariffs imposed by President Donald Trump. The decision was closely contested, with a 5-4 split among policymakers: two favored a larger half-point cut, while two others wanted to hold rates steady. Policymakers noted that while the immediate impact of the US-initiated trade war should not be overstated, the tariffs are expected to slightly weaken UK economic growth and lower inflation, though not enough to trigger a recession. The Bank maintained its guidance for a 'gradual and careful' approach to further rate reductions, given persistent global volatility. Falling inflation and easing mortgage stress provide some relief to UK households, even as political leaders face fiscal pressures from downgraded growth forecasts. The move comes just as a UK-US trade pact is anticipated, although officials warn that broader global slowdowns will still affect Britain.