Interest rates cut to 4.25%

09 May 2025

The Bank of England has cut interest rates from 4.5% to 4.25%, the lowest rate since May 2023.

The Monetary Policy Committee (MPC) had been expected to cut rates, and some experts anticipate back-to-back rate cuts.

Andrew Bailey, Governor of the Bank of England, commented: 'Inflationary pressures have continued to ease so we've been able to cut rates again.'

Responding to the cut, Alpesh Paleja, Deputy Chief Economist at the Confederation of British Industry (CBI), said: '[The] cut to interest rates was widely anticipated, underscoring the Monetary Policy Committee's (MPC) continued preference for a gradual loosening of monetary policy.

'The big question now is whether this gradualism will persist. Disinflationary risks have intensified over the last couple of months: US tariffs pose a fresh headwind to growth, global oil prices have fallen and, at home, the labour market is cooling.

'But heightened uncertainty could keep the MPC from easing off on the brakes too much.

'With so many moving parts in the global and domestic outlook, the Committee may maintain a cautious stance.'