Nigeria News Nalin The Bank of England has lowered its base interest rate from 4.75% to 4.5%, marking a shift in monetary policy attempt to support economic growth.
The move was a quarter-point drop, due to concerns about slow economic performance and inflationary pressures.
This is detailed in a Thursday publication on the bank’s website, titled “Bank interest rates drop to 4.5% – February 2025.”
Gov. Andrew Bailey said: “The welcome news is that we can lower interest rates again today.
“We will monitor the UK’s economic and global development very closely and take a step-by-step and prudent approach to further lower interest rates.”
The bank’s monetary policy committee separates the decision, with two members proposing a 0.5% cut, suggesting a possible further reduction.
The bank’s latest forecast predicts that while investors are expected to have a more positive mitigation cycle, it has been reduced at least twice in the coming years.
However, the economic outlook remains fragile.
The bank revised its growth forecast, warning that the UK will narrowly avoid a formal recession.
It also lowers estimates of the economy’s ability to generate income, indicating extended economic weaknesses.
In a further setback to the government, the bank rejected the prime minister’s latest economic growth plan, noting that they “had no effect on GDP growth in their predicted horizons”.
The decision will have a different impact on consumers.
Borrowers will benefit from lower mortgage and loan costs, but savers can see a drop in earnings.
Savings expert Anna Bowes advises: “Savers should review their accounts and behaviors before further declines.
“If you switch to a better account, you might get four times more.”
MPC
Meanwhile, the Monetary Policy Committee has formulated policies to maintain 2% inflation while supporting growth and employment.
On February 5, 2025, the MPC voted 7-2, reducing the bank tax rate to 4.5%, and the two members prefer to lower it to 4.25%.
The details were retrieved in the Thursday publication on the Bank of England website via Punch Online.
Inflation fell to 2.5% in the fourth quarter, but is expected to rise temporarily to 3.7% in the third quarter of 2025 due to pre-stabilization energy costs.
GDP growth weakens, confidence declines, and productivity remains slow. MPC is cautious in relaxing policies while monitoring inflation risks.
Global uncertainty also looms in the UK economy, with banks highlighting the potential risks of U.S. trade policy under Donald Trump.
Although these tariffs have not been included in the economic model, they pose a significant threat to future growth.
Several financial experts pointed out that as the Bank of England expressed a cautious but stable approach to further reduce cuts, markets and households were prepared for a growing economic landscape.
