The Bank of England (BoE) has cut its main interest rate for the third time in six months as the British economy stagnates, according to AP News.
The BoE said on Thursday that the Monetary Policy Committee had cut its main interest rate by a quarter of a percentage point to 4.50 per cent, the level since mid-2023. The move reflects some concern about the outlook for the British economy.
Official data earlier this month showed an unexpected drop in the inflation rate to 2.5 per cent year-on-year through December, mainly due to easing price pressures in the services sector, which accounts for about 80 per cent of the UK economy.
Another potential reason to lower borrowing rates is the country’s stagnant economic growth.
As inflation has fallen from multi-year highs, central banks, including the US Federal Reserve, have started to cut interest rates. However, economists believe that rates are unlikely to fall to the ultra-low levels that persisted in the years following the 2008-2009 global financial crisis and during the pandemic.
