The Bank of England said it was continuing to cut its main interest rate after UK inflation hit a three-year low and signalled more cuts, AFP reports.
As widely expected, the BoE (Bank of England) cut borrowing costs by 25 basis points to 4.75 percent at its regular meeting, the second reduction since August. Later in the day, the US Federal Reserve is expected to cut interest rates.
"We have managed to cut interest rates again" after annual UK inflation fell below the BoE's target, central bank governor Andrew Bailey said.
The U.K. consumer price index stood at 1.7 percent, the lowest level since 2021 and below the 2 percent target.
"We need to make sure inflation stays close to target so we can't cut interest rates too quickly or by too much. But if the economy develops as we expect, interest rates are likely to continue to fall gradually from here," Bailey warned.
Major central banks began cutting interest rates this year, which were raised in an effort to tame inflation that has surged since the end of the Covid pandemic and Russia's invasion of Ukraine.
Sweden's central bank cut borrowing costs by 0.5 basis points - its fourth reduction this year and the biggest in a decade. Norway, on the other hand, made no change.
Analysts said the Fed is later expected to cut by 25 basis points in a decision that is unlikely to be influenced by Donald Trump's return to power.
The BoE's update followed the new British Labour government's first budget last week, which saw tax rises and increased borrowing.
In August, the BoE cut its benchmark interest rate for the first time since early 2020 from a 16-year high of 5.25% as UK inflation returned to normal levels.
But in September, it decided not to make a second consecutive cut. No meeting was held in October.
The Bank raised borrowing costs 14 times between the end of 2021 - when they were at a record low of 0.1% - and the second half of last year. | BGNES
