The Bank of England has slashed interest rates for the fifth time in a year, bringing the base rate to 4%. Despite this move, policymakers remain wary as inflation risks—especially from food prices—intensify.
In a closely contested vote, the MPC opted for a 0.25% reduction. Governor Bailey cautioned that while rates may decline further, inflationary pressures make the outlook far from certain.
The Chancellor welcomed the rate cut as a win for government policy. But critics warned that Reeves’s budget may be fueling inflation by raising taxes and business costs, intensifying public discontent.
The Bank expects food inflation to rise to 5.5%, driven by weather-stricken harvests and rising wages. These factors may delay additional rate cuts, complicating efforts to revive growth.