The Bank of England has reduced interest rates to 4%, the lowest in over two years, following a split vote by policymakers. The Monetary Policy Committee voted 5-4 to lower the base rate by 0.25 percentage points, marking the fifth consecutive cut in 12 months. Concerns about rising inflation and a struggling economy, characterized by increased unemployment and reduced consumer demand, influenced the decision. The MPC acknowledged the need for gradual future cuts despite anticipated inflation rise.
This was a finely balanced decision. Future rate cuts will need to be made gradually and carefully.
There has been sufficient progress on inflation, but we're also seeing higher layoffs and sluggish consumer spending.
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