Bank of England cuts rate

Source: Dukascopy Bank SA


The Bank of England has reduced its Official Bank Rate from 5.25% down to 5.00%. This rate cut was expected by the market analyst consensus forecasts.

The GBP is reacting to the rate cut with a decline. However, since the cut was already expected, the Pound already declined during the morning hours, a since 06:00 GMT it had dropped from 1.2850 down to levels near the 1.2750 mark.

The United Kingdom's monetary policymakers had kept interest rates at 5.25% since August 2023. In general, the Bank of England is known as the only bank that did not pretend in 2022 that inflation is transitional and started to hike rates gradually from the start of 2022 up to mid-2023.

Most recently, as the inflation data indicates that it has slowed down, the BoE appears to be starting to cut. Meanwhile, as it was made known yesterday, the US Federal Reserve still needs more data before making a decision.

Meanwhile, it has to be taken into account that the Monetary Policy Committee did not vote as expected. It was forecast that 6 out of 9 members will vote for a cut and 3 would want to keep rates unchanged. However, 5 voted for the cut and 4 wanted to keep the rate at 5.50%.
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