Bank of England cuts interest rates for the first time since 2020

On 1 August 2024, the Bank of England's Monetary Policy Committee (the panel that sets UK interest rates) voted to reduce Bank Rate from 5.25% to 5%. It was the first cut since March 2020, when rates were lowered during the early weeks of the Covid-19 pandemic.

The decision was narrow. The nine-member committee voted 5–4 in favour of the cut, with four members preferring to hold rates at 5.25%, the highest level in about 16 years. Governor Andrew Bailey described the move as a careful step, saying policymakers needed to be sure inflation would stay low.

The cut came after a sharp series of increases that began in late 2021 to combat high inflation, which had peaked above 11% in 2022. By mid-2024, inflation had fallen back to the Bank's 2% target. The decision mattered to mortgage holders, borrowers and savers, and it marked the start of a gradual easing cycle. Further reductions followed over the next two years, eventually bringing Bank Rate down to 3.75%.