BoE Slashes Rates by 25bps as Split Widens Among Policymakers

Bank of England Cuts Rates to 4% Amid Divided Vote

The Bank of England (BoE) lowered its key interest rate by 25 basis points to 4% during its August policy meeting on Thursday, but the decision exposed deep divisions among policymakers.

The Monetary Policy Committee (MPC) voted 5–4 in favor of the cut, with four members voicing strong concerns over persistent inflation and preferring to keep rates unchanged. The outcome followed an initial split vote of 4–4–1, indicating the difficulty in reaching consensus and suggesting the BoE’s easing cycle may be approaching its limit.

Despite forecasting inflation to remain close to double its 2% target in the near term, Governor Andrew Bailey and four colleagues supported the cut, citing rising risks to employment.

Bailey emphasized the need for caution, warning against cutting rates too quickly or too deeply. He reiterated that recent elevated inflation is expected to be temporary and stressed that the BoE remains prepared to adjust its policy if the medium-term inflation outlook shifts.