Bank of England cuts interest rates to 4.25%.
Bank of England cuts interest rates to 4.25%, as governor welcomes US tariff deal news
This is an important moment for the UK economy, A lower rate is designed to boost spending by making borrowing, including mortgages, cheaper – but cutting rates means savers get lower returns.
In a new forecast, the Bank also expects higher economic growth in the UK this year .
And the Bank’s governor, Andrew Bailey, welcomes news of the Uk’s tarif deal with us US- but says he hasn’t been briefed on the details.
What are the Bank of England’s agents saying?
The Bank of England’s news conference has ended but there’s still a lot to look at in its report.
As well as having a host of complicated charts and tables, it has feedback from its “agents” around the country, on what they feel is happening in the economy.
The main points are:
- Most firms expect consumer demand to remain weak in 2025, but are “cautiously optimistic” of a slight improvement later this year if household confidence improves
- Casual dining venues are offering more discounts and promotions than usual but are only maintaining stable custom “at best”
- Households are prioritising holidays over other discretionary spending
- A lot of firms are taking a “wait and see” approach to whether the UK economy picks up before hiring and investing
- The increase in employers’ National Insurance is encouraging some businesses to seek efficiency gains through technology
Michael Race
Reporting from the Bank of England
