The Bank of England has opened the door to cutting interest rates in August in what would be the first drop in borrowing costs for more than four year
The Bank of England has opened the door to cutting interest rates in August in what would be the first drop in borrowing costs for more than four years.
On Thursday, the Bank voted to hold interest rates at 5.25% in a decision that was widely expected.
Earlier this week, figures revealed that inflation – which measures the pace of price rises – had slowed to 2% in May, which is in line with the Bank of England’s target. There are risks that some areas of inflation remain high.
But minutes from a gathering of the Bank’s rate-setting committee show that when they meet again in August they will look at whether these areas of concern are “receding”.
It said: “On that basis, the committee will keep under review for how long [the] bank rate should be maintained at its current level.”
If the Bank does go ahead with an interest rate cut in August, it would be the first one since March 2020 when the UK was heading into the first Covid lockdown.
Details from this month’s meeting showed that the Bank’s committee voted 7-2 to hold rates, but the result was not as cut and dried as it had been previously. For three members, voting to hold this month was a “finely balanced” decision.
The Bank of England’s governor, Andrew Bailey, said: “It’s good news that inflation has returned to our 2% target.
“We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.”
www.bbc.com