Bank of England cut interest rates to 4.25%

The Bank of England have cut interest rates to 4.25% to help boost growth in the economy.

Lowered from the previous rate of 4.5%, policymakers on the bank’s Monetary Policy Committee (MPC) have made the change to help ease inflation and increase economic growth.

The move reduces interest rates in the UK to their lowest level since May 2023 and will make it less expensive for businesses and individuals to borrow money.

UK interest rates. | PA Wire

The nine person Bank of England committee voted with a majority of five-four to reduce the rates by 0.25%. Two members voted for a larger 0.5% reduction, while two voted for no changes.

The decision comes amid global economic uncertainty as a result of the tariff policy put in place by US President Donald Trump, with the UK Government set to announce details of a tariff deal between the two countries on Thursday, May 8.

The Bank of England said that while UK economic growth is expected to be stronger than anticipated this year, it forecasts that 2026 will be weaker as these tariffs impact global trade.

Commenting on the cut, Chancellor Rachel Reeves said: “This interest rate cut is welcome news, and the fourth since we came into government making it cheaper for businesses to borrow, reducing the cost of a new mortgage, making homeownership more accessible, car finance more affordable and easing the pressure on those paying off personal loans.

“But there is more to do, and I know families are still facing cost-of-living pressures.

“In a changing world we’re bringing stability to the public finances and going further and faster to grow the economy, putting more money in the pockets of working people through our plan for change.”

This is a breaking news story, with more to follow.