Following months of speculation about the base rate being cut, the Bank of England Monetary Policy Committee has made the decision.
The Bank of England has decided to reduce the base interest rate by 0.25%, bringing it down from its 16-year high of 5.25% to 5%.
The decision was made by a narrow margin, with the Bank's Monetary Policy Committee voting five to four in favor of the cut.
This move has been eagerly anticipated by the property industry, which hoped that a rate cut would provide a much-needed boost to the housing market as the summer holidays commence.
Major lenders, including Halifax, NatWest, and Santander, had already reduced their mortgage rates in anticipation of today’s decision.
Homeowners with fixed-rate mortgages nearing their end were also looking forward to this potential rate cut, which could offer them some relief as they prepare to renegotiate their loans.
Inflation held steady at 2% in both May and June, aligning with the previous government’s target. This stability likely played a role in the Bank’s decision-making process.
In contrast to today's decision, the Monetary Policy Committee opted to maintain the base rate at 5.25% during their June meeting. The next announcement from the MPC is scheduled for September 19.
Newly appointed Chancellor Rachel Reeves has expressed her support for a base interest rate cut. Reeves, who took office following Labour’s recent General Election victory, acknowledged the Bank’s independence but suggested that a rate cut would be a prudent consideration.