Bank of England Cuts Interest Rates in Cautious Move

The Bank of England has made its first interest rate cut since 2020, lowering rates to 5%. This decision comes as the bank expects the economy to grow at a modest 0.25% in the coming months, but warns of rising unemployment.

The rate cut is a cautious move in contrast to the European Central Bank's approach, as major central banks navigate persistent inflationary pressures. Despite the cut, the Bank of England anticipates rates reaching 3.5% by 2025, well above pre-Covid levels.

The decision to cut rates was a narrow one, with a 5 to 4 vote in the monetary policy committee. The bank's chief economist acknowledges the challenges posed by inflation, even as the jobs market cools in retail and hospitality.

The interest rate cut is expected to have an impact on borrowers, with reduced monthly payments for tracker mortgage and standard variable rate customers. However, savings rates are likely to be reduced, and credit card rates are not directly tied to the base rate.

The Bank of England's decision may also have implications for Bitcoin, with potential boosts to its price following the rate cut. Overall, the bank is taking cautious steps to balance inflation and economic growth.