The Bank of England has reduced interest rates from another percentage point, which reduced the cost of the loan to 4.5%.
And in a sign that households can expect more cuts in the coming months, two members of the BankThe Monetary Policy Committee said they would have preferred to reduce the rates even more, half a percentage point.
Follow the live reaction to the drop in interest rates in the money blog
However, the bank has reduced its forecasts for economic growth, providing that the economy will bypass an official recession only by the narrowest margin of the coming months, and has demoted its estimate of the ability of the economy to generate income . And in a new blow to the Chancellor, he said that his last growth plans, unveiled in a speech last week, will add nothing to the raw growth of interior products in his forecast horizon.
The governor of the bank, Andrew Baileysaid: “It will be the good news that we have been able to reduce interest rates today. We will closely monitor the British economy and global developments and adopt a progressive and meticulous approach to further reduce rates.
“Low and stable inflation is the foundation of a healthy economy and it is the work of the Bank of England to ensure it.”
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Data on the financial market later showed that investors expected a total of four rate drops this year, largely due to the lowest growth prospects.
Bailey told Sky News: “Listen, we do not approve of an interest rate route. We used the gradual and prudent words to describe our future policy, in a way in a “position” in sense, if you wish, for very good reasons.
“One is because we must see the proof that this path of disinflation continues, the underlying path. And secondly, I fear that there is just a greater uncertainty in the world around us. »»
The report on monetary policy and banking forecasts published in parallel with the decision today indicate that the economy should have a few more years of weakness. They reduced economic growth forecasts this year, next year and the following year, as well as the increase in inflation forecasts. The bank also said that the potential growth rate of the economy had dropped, down 1.5% this time last year to 0.75% for the moment.
He said that he expected October budget To increase the economic growth of 0.75%, thanks in large part to a greater public investment, it also expected that National insurance elevation To increase the activity, in particular by lowering employment.
Analysis: Where are interest rates going from here?
He also warned that the price Led by Donald Trump on various economies posed a risk of economic growth in the years to come, although it has not yet integrated into its models.