Interest Rates Take a Dip — Lowest in Over 2 Years

The Bank of England has just nudged interest rates down again — this time to 4%. That’s the fifth cut in a year and the lowest we’ve seen in over two and a half years. Why? Rising food prices are expected to push inflation up again, and the Bank’s trying to ease the pressure.

The decision wasn’t exactly smooth sailing — the committee in charge had to vote twice to break a tie. But in the end, the rate got trimmed by 0.25 percentagepoints.

If you’ve got a variable mortgage of around £140,000, that means you’ll be saving roughly £30 a month. Not huge, but it adds up.

Andrew Bailey, the Bank’s governor, said, “Yeah, we’ve lowered rates, but it was a tough call.” He made it clear that while rates are likely to keep heading down, they’ll be doing so slowly and carefully.

The Monetary Policy Committee — that’s the nine-person squad that sets the base rate every six weeks — couldn’t agree at first. Four members wanted to leave rates as-is, four were all in for the 0.25% cut, and one, Alan Taylor, initially pushed for a deeper 0.5% cut. In the end, he scaled it back to 0.25% to settle the tie.

This was the first time the group had to go for a second round of voting, which shows how tricky things are right now. The UK’s economy isn’t exactly growing fast, and there are real concerns about a potential recession. But at the same time, inflation’s proving stubborn — especially thanks to pricier food.

So yeah, borrowing just got a little cheaper — but inflation still isn’t chilling out.