The Bank of England decided, by a slim margin among its policymakers, to cut interest rates on Thursday for the first time in more than four years amid slower inflation.
Britain’s central bank lowered rates by a quarter of a percentage point to 5 percent, the first rate cut since March 2020, when the coronavirus pandemic shut down large parts of the economy. The rate cut brings an end to the most aggressive efforts of the central bank to stamp out high inflation, which reached double-digits less than two years ago.
The decision is likely to bring some relief to mortgage holders and business owners who have been stung by the rising cost of borrowing. For the past year, interest rates were held at 5.25 percent, the highest level since 2008.
But policymakers warned that interest rates would be lowered slowly, which would keep the policy stance restrictive for awhile.
“We need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much,” Andrew Bailey, the bank’s governor, said in a statement.