Bank of England Slashes Interest Rate to 3.75 Percent
This marks a shift after the central bank maintained rates in its two prior meetings. At 3.75%, the Bank Rate is now at its lowest level since 2022.
The decision came from the Monetary Policy Committee in a tight 5-4 vote. Five members supported the 25 basis point cut, while four preferred to keep rates unchanged.
"CPI inflation has fallen since the previous meeting, to 3.2%. Although above the 2% target, it is now expected to fall back towards the target more quickly in the near term," the bank said in a statement.
The central bank added, "Reflecting restrictive monetary policy, and consistent with evidence of subdued economic growth and building slack in the labor market, pay growth and services price inflation have continued to ease."
Setting monetary policy to balance risks around achieving the 2% inflation target sustainably, the bank noted that the risk of persistent inflation has become "somewhat less pronounced" since its last meeting, while weaker demand continues to pose risks to medium-term inflation.
"The extent of further easing in monetary policy will depend on the evolution of the outlook for inflation," it said, highlighting that current evidence points to a gradual downward path for rates.
"But judgments around further policy easing will become a closer call," the central bank added.
The latest official figures show annual consumer inflation in the UK slowed to 3.2% in November, marking the lowest rate in eight months, down from 3.6% in October.
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