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Bank of England cuts rates, sees weaker growth and inflation spike
Bank of England cuts rates, sees weaker growth and inflation spike
By David Milliken and Andy Bruce
February 6, 2025 11:23 AM EST • Updated 2 hours ago
Summary
• Bank of England cuts interest rates to 4.5% from 4.75%
• MPC's Dhingra and Mann vote for bigger cut to 4.25%
• BoE sees inflation peaking at 3.7% this year
• Growth outlook for 2025 halved to 0.75%
• Markets see slightly greater chance of more 2025 rate cuts
LONDON, Feb 6 (Reuters) - The Bank of England cut interest rates by a quarter-point and some policymakers wanted a bigger move to offset a slowdown, but the BoE said it would be careful about further moves in the face of an expected inflation spike and global economic uncertainty.
The BoE halved its 2025 growth outlook - a blow for finance minister Rachel Reeves who is seeking to speed up the economy - while a jump in inflation to almost double the central bank's 2% target this year would probably be temporary.
Thursday's rate cut to 4.5% was in line with expectations in a Reuters poll of economists. ... ut investors were surprised by the dissenting votes on the Monetary Policy Committee from external members Catherine Mann - who was previously the MPC member most opposed to rate cuts - and Swati Dhingra, who sought a bigger reduction to 4.25%.
Sterling fell against the dollar to trade 1% lower on the day. Two-year British government bond yields touched their lowest level since before Reeves' budget in October.
{snip}
By David Milliken and Andy Bruce
February 6, 2025 11:23 AM EST • Updated 2 hours ago
Summary
• Bank of England cuts interest rates to 4.5% from 4.75%
• MPC's Dhingra and Mann vote for bigger cut to 4.25%
• BoE sees inflation peaking at 3.7% this year
• Growth outlook for 2025 halved to 0.75%
• Markets see slightly greater chance of more 2025 rate cuts
LONDON, Feb 6 (Reuters) - The Bank of England cut interest rates by a quarter-point and some policymakers wanted a bigger move to offset a slowdown, but the BoE said it would be careful about further moves in the face of an expected inflation spike and global economic uncertainty.
The BoE halved its 2025 growth outlook - a blow for finance minister Rachel Reeves who is seeking to speed up the economy - while a jump in inflation to almost double the central bank's 2% target this year would probably be temporary.
Thursday's rate cut to 4.5% was in line with expectations in a Reuters poll of economists. ... ut investors were surprised by the dissenting votes on the Monetary Policy Committee from external members Catherine Mann - who was previously the MPC member most opposed to rate cuts - and Swati Dhingra, who sought a bigger reduction to 4.25%.
Sterling fell against the dollar to trade 1% lower on the day. Two-year British government bond yields touched their lowest level since before Reeves' budget in October.
{snip}