UK Lowers Base Rate to 4%...Additional 0.25% Cut After Three Months (Comprehensive)

BOE: "Easing Tightening Stance... Maintaining Cautious Approach"
Five Monetary Policy Committee Members Support Rate Cut, Four Support Holding Steady

The Bank of England (BOE), the central bank of the United Kingdom, has lowered its base interest rate by 0.25 percentage points to 4.00% per annum. This marks the fifth rate cut since the middle of last year, bringing the rate to its lowest level since March 2023.

On August 7 (local time), the BOE held a Monetary Policy Committee (MPC) meeting and made this decision. The outcome aligns with the forecasts of market experts surveyed in advance by Reuters. Out of the nine committee members, five voted in favor of a 0.25 percentage point cut, while the remaining four supported holding the rate steady. Previously, the votes were split with four for a 0.25 percentage point cut, one for a 0.5 percentage point cut, and four for no change, resulting in an unusually divided opinion and a final decision reached after two rounds of voting.

Bank of England. Reuters Yonhap News

The UK's base interest rate had climbed to 5.25% by August last year, reaching a 16-year high. Since then, it has been gradually reduced by 0.25 percentage points each in November last year, February and May this year, and now again in August.

The BOE operates its monetary policy with a target annual consumer price inflation rate of 2%, but as of June, the inflation rate remains at 3.6%. This makes a delicate balancing act between price stability and economic response inevitable.

Recently, companies have increased pressure on monetary authorities to cut rates, citing not only the slowdown in domestic growth but also concerns that the high-tariff policies being pursued by U.S. President Donald Trump could have repercussions for the UK.

In a statement released the same day, the BOE said, "A gradual and cautious approach to rate decisions remains appropriate," indicating its intention to maintain its current policy stance. This suggests that the rate-cutting cycle may continue for some time.