The Bank of England (BoE) decided on Thursday to cut the rate by 0.25 per cent points to 4 per cent, citing continued disinflation and subdued economic activity. The decision marks the BoE's first rate cut since inflation peaked in the wake of global supply shocks over two years ago. The Monetary Policy Committee (MPC) voted 5–4 in favour of the cut, with dissenting members preferring to hold the rate at 4.25 per cent. "The path of disinflation in underlying domestic price and wage pressures has generally continued, albeit to different degrees." the BoE's monetary Policy Committee (MPC) said in a statement. In June, the annual CPI inflation rose to 3.6 per cent in June, with the BoE expecting it to increase slightly further to peak at 4.0 per cent in September, driven by food, energy, and administered prices, before falling back thereafter towards the 2 per cent target. Pay growth has slowed and is expected to continue declining, though it remains above historical norms. UK GDP grew by 0.1 per cent in the second quarter and is forecast to rise to 0.3 per cent in the third. The labour market continues to loosen, with rising unemployment and falling vacancies indicating spare capacity. BoE staff estimated that UK GDP growth had been 0.1 per cent in the second quarter of 2025 , in line with the projection in the May Report, and growth was expected to pick up to 0.3 per cent in the third quarter. Attribution: Amwal Al Ghad English Subediting: Y.Yasser
