The Bank of England (BOE) held a monetary policy committee meeting on the 7th (local time) and lowered the benchmark interest rate to 4.00% per year by 0.25 percentage points (P).
Of the 9 members of the monetary policy committee, 5 supported the 0.25% P reduction, while the remaining 4 expressed a preference for keeping it unchanged. The initial voting resulted in 4 votes for a 0.25% P decrease, 1 vote for a 0.5% P decrease, and 4 votes for no change, which led to an unusual second round of voting to reach a decision.
This is the fifth time that the UK has lowered its benchmark interest rate since mid-last year. The rate, which rose to a 16-year high of 5.25%, has been cut by 0.25% P five times in August, November of last year, and in February, May, and this month. The current benchmark interest rate of 4.00% is the lowest level since March 2023.
The BOE adjusts the benchmark interest rate with a target consumer inflation rate of 2%, but the inflation rate over the past year until June has significantly exceeded the target at 3.6%.
The BOE has previously noted that interest rates are on a 'gradual declining path,' and in its statement that day, it indicated that 'a gradual and cautious approach to (interest rate reductions) remains appropriate.'