The Bank of England (BOE), the central bank of the United Kingdom, held a monetary policy committee meeting on the 6th (local time) and decided to cut the base interest rate by 0.25 percentage points. The UK base interest rate is now 4.50% per annum, the lowest level since June 2023.
This rate cut comes three months after the 0.25 percentage point reduction in November last year.
The size of this cut matched market experts' expectations. On the day, seven BOE monetary policy committee members voted for a 0.25 percentage point cut, while two voted for a 0.50 percentage point cut.
The UK's December Consumer Price Index (CPI) recorded 2.5%, below expectations. The core CPI, which excludes volatile food and energy prices, dropped significantly from 3.5% in the previous month to 3.2%. However, the BOE forecasted that inflation would sharply rise to 3.5% by the end of this year. This is a significant increase compared to the 2.75% forecast made in November last year.
In a statement, the BOE said, "We will closely monitor the UK and global economic situations and take a gradual and cautious approach to further lowering interest rates."
Andrew Bailey, Governor of the BOE, said, "As the disinflation process continues, we expect to be able to cut rates further," but added, "However, how far and how fast to cut will be judged at each meeting."
Concerns about tariff impositions by the Donald Trump administration in the United States have recently increased. Regarding the global economy, he said, "There are risks," and "It remains uncertain what form global trade policy will ultimately take."
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