NEWS: BOE CUTS RATE TO 4% IN UNPRECEDENTED RE-VOTE
- Gavin Renwick
- Aug 7
- 2 min read
A 2 YEAR LOW BENCHMARK INTEREST RATE WAS INTRODUCED BY THE BANK OF ENGLAND 06/08/25 FOLLOWING AN UNPRECEDENTED RE-VOTE.
Market Reaction:
GBP/USD climbed 0.5% to $1.343.
Gilts Fell sending 2-Year Yield six basis points higher to 3.88%.
UK long-dated bonds outperformed with the yield gap between 10 and 30 year narrowing by 2 basis points.
The BoE Monetary Policy Committee (MCP) voted to reduce the Bank of England benchmark interest rate by 0.25% to 4%. This was in an almost unprecedented re-vote (28 years) on the subject following failed attempts to reach a majority. The MCP voted 5-4 in favour of the reduction.
In a brief statement, the BoE explained its reasoning as follows:
Inflation had dropped significantly since its peak of 11% in 2022.
While expected to increase slightly again to 4% due to food price inflation, the BoE was 'confident' it would return to downwards to the stated target of 2%
You can view the full minutes and summary of the BoE decision by clicking here.
COMMENT
Food Price inflation was predicted at 3.7% come September but is expected to be 4%.
Tax Data suggests the UK economy has lost 185'000 jobs since the employers minimum wage was increased.
Government Borrowing in the first 3 months of the fiscal year was £57.8BN. Approximately £7.5BN higher than forecast.
Since the the Non-Dom Tax changes, 718 directors have moved abroad as of July 2025 with the rate is increasing.
A Bloomberg News Analysis of 5 million company filings in June 2025 found 4'400 planning to move operations abroad within the next 12 months.
The weather forecast suggests a California Bar Examination is on the horizon.
