Bank Of England Lowers Interest Rates To 4%

The Bank of England has lowered interest rates from 4.25% to 4% in an effort to stimulate the economy across the United Kingdom (U.K.).

In a statement, the British central bank said it chose to trim interest rates by 25-basis points as part of its “gradual and careful” approach to monetary policy.

The quarter point rate cut was widely expected among economists.

The Bank of England has had to weigh sticky inflation, with the Consumer Price Index (CPI) coming in at a hotter-than-expected 3.6% in June of this year, alongside weak economic growth.

The U.K.’s gross domestic product (GDP) contracted 0.1% month-over-month in May.

Economists expect the central bank to continue lowering interest rates this year, though the timing and pace of future cuts is not clear.

The labour market remains a key factor in the Bank of England decisions on interest rates, though so far there is no evidence of a steep downturn in employment across the U.K.

The latest interest rate decision was not unanimous, with the central bank’s nine-member committee voting 5 to 4 to reduce the Bank Rate by 25-basis points rather than hold it steady.

The Bank of England is next scheduled to decide on interest rates Sept. 18 of this year.