Bank of England cuts interest rates to 4.5% amid sluggish growth

The Bank of England made its first interest rate cut of 2025 on Thursday, resuming monetary easing amid ongoing concerns over sluggish growth in the British economy.

The central bank cut its benchmark interest rate by 25 basis points to 4.5%, with a majority of seven members of the nine-strong monetary policy committee voting in favor.

According to Reuters, Britain's Finance Minister Rachel Reeves welcomed the Bank of England's interest rate cut on Thursday, but noted she was not satisfied with the growth rate.

"This interest rate cut is welcome news, helping ease the cost-of-living pressures felt by families across the country and making it easier for businesses to borrow to grow," Reeves said in an emailed statement in response to the BoE's decision to cut interest rates by a quarter of a percentage point.

"However, I am still not satisfied with the growth rate."

Economists had widely expected the central bank to trim rates following a spate of lackluster U.K. growth data.

The economy flatlined in the third quarter, according to data released in December, while the latest monthly GDP reading showed the economy expanded 0.1% in November after shrinking by 0.1% in October. Weak retail data last month also added to expectations that the BOE would cut rates.

Britain’s inflation rate fell to a lower-than-expected 2.5% in December, with core price growth slowing further, also fueling expectations that central bank policymakers would steer toward their first cut of 2025. The central bank’s inflation target is 2%.

BOE monetary policy committee members must balance the need to boost growth with the inflationary risk posed by a nascent trade war, as U.S. President Donald Trump sets out to impose tariffs on America’s closest trading partners and has threatened to apply the same measures on the EU and U.K.