Bank of England cuts interest rates for first time in over four years: Live updates

LONDON — The Bank of England on Thursday delivered its first interest rate cut in more than four years, taking the key rate to 5%.

While several analysts had expressed the BOE could announce an interest rate reduction during its latest meeting, a lack of clear signaling from the central bank had shrouded the decision in uncertainty.

Policymakers ultimately voted 5-4 in favor of the reduction, with Governor Andrew Bailey saying the committee would move ahead cautiously.

Markets were pricing in a 61% probability of a 25-basis-point reduction of its key rate at the August meeting as of 8:15 a.m. in London, despite U.K. inflation hitting the BOE’s 2% target for two straight months.

The Bank Rate has been held at a 16-year high of 5.25% since August 2023.

The BOE typically provides less forward guidance than some other central banks, but the Thursday decision is viewed as an especially close call, given the recent six-week period in which its communications were restricted because of the U.K. general election.

While recent breakdowns have seen two votes for a rate cut and seven for a hold, some of the BOE’s more hawkish policymakers have been vocal about their concerns over wage growth and sticky services inflation.

The decision will be announced at midday U.K. time and will be followed by a press conference. Thursday will also see the release of the quarterly Monetary Policy Report, which will contain economic growth and inflation projections.