In response to weak economic growth and inflation risks, the Bank of England has reduced its key interest rate from 4.75% to 4.5%, marking the third cut in six months. This decision comes after December's inflation rate dipped to 2.5%, although it remains above the Bank's 2% target. Industry groups warn that the Chancellor's national insurance contributions and wage hikes could lead to higher consumer prices. While future rate cuts are on the table, economists caution that maintaining higher rates may still be necessary to combat ongoing inflationary pressures.
The Bank of England's decision to cut interest rates reflects growing concern over weak economic growth and rising inflation risks, pressing challenges for Chancellor Rachel Reeves.
After inflation unexpectedly cooled to 2.5%, the Bank's monetary policy committee swiftly moved to cut rates, highlighting the ongoing risks in the UK economy.
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