BoE cuts interest rates to 4%

Written by Michael Griffiths

07/08/2025

The Bank of England (BoE) has announced a 0.25% cut to its base rate to bring interest rates down to 4%.

The latest move is the fifth cut to the base rate since the BoE started to bring interest rates down in August last year, from a peak of 5.25%.

At its meeting this week, the nine members on the BoE’s Monetary Policy Committee (MPC) voted by a majority of five to four for a 0.25% reduction. Four members were in favour of holding rates at 4.25%.

The central bank’s decision to announce another rate cut follows the 12-month rate of CPI inflation, as reported by the Office for National Statistics (ONS), increasing to 3.5% in Q2 2025.

According to the report published by the BoE today, the MPC is expecting inflation to edge up slightly further to peak at 4.0% in September, before starting to fall back again towards its 2% target in the months after.

“The Committee remains alert to the risk that this temporary increase in inflation could put additional upward pressure on the wage and price-setting process,” the BoE report said. “Overall, the MPC judges that the upside risks around medium-term inflationary pressures have moved slightly higher since May.”

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