Bank of England Cuts Rates Amid Slowing UK Inflation and Growth

The Bank of England has made its third interest rate reduction in six months, reacting to signs of sluggish economic growth in Britain and an unexpected dip in inflation. The key rate was reduced by a quarter point to 4.5 percent, leading to a revision in the bank's economic growth forecasts for this year. Notably, two out of nine members of the rate-setting committee advocated for a larger half-point cut.

Governor's Gradual Approach

Andrew Bailey, the governor of the central bank, stated that policymakers would adopt “a gradual and careful approach to reducing rates further” while keeping a close watch on economic changes both in Britain and abroad. The inflation rate showed a slight decline to 2.5 percent in December, contrasting with economists’ expectations of it remaining steady. Particularly, the services sector, known for its stubbornly high inflation, saw a decrease from 5 percent in November to 4.4 percent in December.