UK interest rates have been cut for the first time in more than four years, releasing some pressure on borrowers as the Bank of England was encouraged by signs that inflation has slowed.
The Bank reduced rates from 5.25% to 5%, following a split vote which saw some members of the Monetary Policy Committee (MPC) prefer to keep the level unchanged.
Governor Andrew Bailey, who voted for a cut, said “inflationary pressures have eased enough that we’ve been able to cut interest rates today”.
However, he signalled the central bank was going to be careful not to cut rates too quickly going forward.
Borrowing costs had been held at 5.25% – the highest level in 16 years – since August last year.
Thursday’s decision marks a turning point for the Bank, which has not implemented a rate cut since the onset of the Covid-19 pandemic in 2020.
It means that while rates remain elevated, mortgage costs could start to come down further while savings rates offered by banks could be reduced.
Following the Bank of England's decision to cut interest rates, SNP Westminster economy spokesperson Dave Doogan (below) said the UK remains behind the rest of Europe while costs remain at a historic high.
He said: “While this is a welcome move from the Bank of England it should have happened long before now - it’s possible to fully respect the independence of the central bank, but also respect the circumstances and facts before us.
“We are still behind our European neighbours and interest rates, mortgage rates and lending costs remain at a historic high - add to that Labour’s renewed austerity agenda and their support for the two-child cap and the pressure on household incomes remains clear for all to see.
“The newly formed Labour government must now bring in immediate measures to fix the mortgage mess that the Tories left behind - the public know that Brexit Britain is broken and soaring costs of interest rates and mortgage costs are another symptom of Westminster’s failures.
“The SNP promised voters we would stand up for Scotland's interests and hold the Labour government to account – and that’s exactly what we intend to do.”
