The Bank of England has cut interest rates for the first time in more than four years after UK inflation fell to its target rate of 2 per cent.
The Monetary Policy Committee on Thursday reduced the bank’s key rate by a quarter of a percentage point to 5 per cent. Officials had kept it at 5.25 per cent for a year in an effort to bring down inflation.
Headline inflation fell to 2 per cent in May and stayed there in June, although services inflation has remained stubbornly high.
The MPC last cut rates in March 2020 at the height of the Covid-19 pandemic.
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Sterling dropped to a four-week low against the dollar after the interest rates cut, having held them at a 16-year high of 5.25 per cent since last August.
The pound extended losses, falling 0.75 per cent against the dollar on the day to $1.276 immediately after the announcement, while interest rate sensitive two-year gilt yields were 0.06 percentage points lower at 3.76 per cent. - Copyright The Financial Times Limited 2024
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