Bank of England Slashes Rates as Price Surge Casts Shadow

The Bank of England has cut its key interest rate to 4% in a move meant to ease financial pressures. But any hope of relief may be dimmed by a projected surge in food inflation.
The MPC’s 5-4 decision showed growing divisions among policymakers. Some warned that cutting rates too quickly could re-ignite inflation, especially in essential goods.
Food inflation, driven by both global factors like weather and local ones like wage increases, is now forecast to reach 5.5%. These costs are expected to be passed to consumers.
Governor Bailey said while the overall path is toward lower rates, any further cuts will be gradual. The Bank’s cautious tone caused markets to react nervously.
Though officials claim economic stability has enabled this cut, critics say recent tax policies are adding to inflation and unemployment, making it harder for households to catch a break.