Bank of England Cuts Interest Rates

Thu 07 Aug 2025

The Bank of England has announced that they’re cutting interest rates from 4.25% to 4%. In an announcement that had many industry experts teetering between whether or not the Bank of England would raise interest rates, cut them, or steady the ship, the official announcement may surprise many. 

In an unprecedented second vote by the Monetary Policy Committee, after it initially failed to reach a majority verdict, five members backed the quarter-point cut, while four voted to keep rates on hold.

Andrew Bailey, Bank Of England governor, said: “We’ve cut interest rates today, but it was a finely balanced decision. Interest rates are still on a downward path, but any future rate cuts will need to be made gradually and carefully.”

The Bank also warned that there were signs that the economy was slowing down, with increasingly nervous households stashing more away in savings as consumer sentiment sours.

The reduction is expected to ease pressure on mortgage holders and homebuyers, potentially unlocking more affordable borrowing options.

This move brings borrowing costs back to levels not seen since March 2023, the lowest in two years.