BoE Interest Rate Cut by 25 bps

London: 2 August 2024 (TraderMade): The Bank of England (BoE) interest rate decision to surprisingly cut interest rates sent shockwaves through global markets yesterday. This decision marks the first rate cut since the start of the COVID-19 pandemic in 2020.

The Bank of England base rate was cut by a quarter percentage point, down to 5%.

Inflationary Pressures Still Linger Despite Rate Cut

The BoE interest rate decision to cut rates comes amidst soaring inflation in the UK, with consumer prices surging to the peak at their fastest pace in decades. However, Governor Andrew Bailey of the BoE acknowledged signs of economic slowdown, prompting the central bank to take action to stimulate growth.

Market Volatility and Uncertain Future

The BoE's surprise rate cut triggered a sell-off in the Pound, which fell to its lowest level against the US Dollar in nearly a month. Investors are now grappling with the BoE's attempt to balance inflation control with economic stimulus. Governor Bailey emphasized that the BoE will "be careful" with future rate cuts, highlighting the delicate situation the central bank faces.

The full impact of this rate cut remains to be seen. With inflation still a major concern, the BoE's decision and its future actions will be closely watched by businesses, consumers, and financial markets alike.