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6d ago

Bank of England Cuts Rates to 4.25% as Policymakers Debate Inflation Risks

The MPC voted 5-4 for a rate cut, with Catherine Mann dissenting over concerns about rising goods prices and firms' pricing power.

Economist and member of the Bank Of England’s Monetary Policy Committee Catherine Mann poses for a photograph ahead of a speech at Manchester Business School in Manchester, Britain, January 12, 2023. REUTERS/Phil Noble/File Photo
Catherine Mann voted to leave interest rates unchanged at 4.5 per cent at the most recent rate-cutting meeting

Overview

  • The Bank of England's Monetary Policy Committee (MPC) reduced the base rate to 4.25%, marking the second rate cut of 2025.
  • Catherine Mann, one of two dissenting MPC members, warned that rising goods price inflation and resilient labour markets could sustain inflationary pressures.
  • Mann expressed concerns that firms may exploit cheaper imports to rebuild profit margins, delaying broader price moderation.
  • UK headline inflation dropped to 2.6% in March, but goods inflation ticked up slightly, and services inflation remains elevated at 4.7%.
  • Market forecasts now project UK interest rates to fall to 3% by February 2026, reflecting expectations of further easing as inflation stabilizes.