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The Bank of England has cut interest rates as inflation continues to remain steady, holding at their two percent target for two consecutive months.
Bank Rate is currently 5.25per cent, a 16-year high where it has been pegged for the last year to fight inflation, but it has now been set at five percent, a drop of 0.25 percentage points.
It is the first time UK rates have gone down since the onset of the Covid-19 pandemic in March 2020.
The decision will come as welcome news to homeowners who have been struggling with rising mortgage payments over the past year. Interest rates have remained at a 16-year high over the past 12 months, bringing spiralling mortgage rates with them.
ChancellorRachel Reeves has welcomed the move but warned “millions of families are still facing higher mortgage rates after the mini-budget”.
While the cuts mean a help to hard-up families, Unite chief claimed the change is “too little, too late” as figures still stand at historic highs.
Hunt chalks up interest rate cut
Jeremy Hunt has claimed the latest interest rate cut is part of the Tories’ legacy.
The Tory MP said Labour inherited a “stronger economy” thanks to the “difficult decisions” he took while in No 11.
The shadow chancellor said:“Today’s cut will be welcome news for millions of homeowners and shows that Labour inherited a stronger economy which was on the right track.
“In government, we took difficult decisions that cut inflation from 11.1 per cent to the Bank’s target of 2.0 per cent, paving the way for lower rates.
“Our concern is that further substantive cuts may now take longer because of inflation-busting public sector pay rises rushed through by the Chancellor ahead of the summer.”
Lib Dems hail ‘light at the end of tunnel’ after interest rates announcement
The Liberal Democrats have said “there is light at the end of the tunnel” after the reduction of interest rates.
Treasury spokesperson, Sarah Olney MP said: “There is finally light at the end of the tunnel for homeowners but sadly for millions the damage has already been done. Families across the country are already paying off sky high mortgage bills.
“The country is still reeling from Liz Truss’ disastrous mini-budget and years of economic failure under the Conservatives.”
She added: “Today must serve as a reminder that governments should never treat Budgets as an economic experiment for wild policies. We need a return to sound economics and stability after years of Conservative chaos and mismanagement.”
Tory MPs were quick out the gates to claim credit for the cut
Tory MPs took just minutes to try to claim credit for the Bank of England’s decision, Archie Mitchell writes.
“Our plan was working,” declared Central Suffolk and North Ipswich MP Patrick Spencer, moments after the announcement was published.
Rachel Reeves will be rebelling at the fortuitous timing of the central bank’s decision, right after Rishi Sunak’s snap general election, with Labour able to bank any bounce felt by consumers.
Unite slams interest rates cut is ‘too little, too late’
Unite has branded the Bank of England’s move to cut interest rate from 5.25 per cent to 5 per cent “too little, too late”.
General secretary Sharon Graham said: “This is too little, too late from the Bank of England. Interest rates still stand at historic highs and this small cut will offer little help to workers struggling with the cost-of-living crisis and record housing costs.
“Decisive action from both the Bank of England and government is urgently needed. Including, a clear roadmap for future rate cuts and a programme of serious investment in our public services and industry to get us out of this crisis.”
Reeves welcomes Bank of England interest rates cut
The chancellor has welcomed the Bank of England’s decision to cut interest rates but warned families are still facing soaring mortgages.
Rachel Reeves said: “While today’s cut in interest rates will be welcome news, millions of families are still facing higher mortgage rates after the mini-budget.
“That is why this government is taking the difficult decisions now to fix the foundations of our economy after years of low growth, so we can rebuild Britain and make every part of our country better off.”
Breaking: Bank of England cuts interest rates in major boost for mortgage holders
The Bank of England has decided to cut the base rate for the first time since 2020.
The Bank’s Monetary Policy Committee has announced the country’s main interest rate is down to 5 per cent from 5.25 per cent in August 2023.
It comes after new economic data suggested the UK’s cost-of-living crisis has eased in recent months thanks to inflation coming off the boil.
Consumer Prices Index (CPI) inflation hit 2% in May and June, which is the central bank’s target level, indicating that price rises have been brought under control.
Economists stressed that other key indicators of inflationary pressure – mainly services inflation and wage rises – have remained a concern for policymakers.
Pound falls as interest rate decision approaches
While we wait the Bank of England to announce the interest rate decision, the pound is still in the red.
The pound is currently down 0.6 per cent or 0.8 of a cent at $1.2775 hitting a four-week low this morning.
Bas Kooijman, CEO and asset manager of DHF Capital, said: “The British Pound is facing pressure as investors await the Bank of England’s (BoE) decision on interest rates, later today.
“Recently, the Pound has weakened, reaching a three-week low and falling against the euro and the dollar. This decline is partly due to expectations that the Bank of England may cut rates. Markets strongly expect the Bank of England to lower rates from 5.25%, which has also contributed to drops in British two-year and five-year bond yields.”
Junior doctors could strike again next year despite pay rise
The head of the junior doctors’ union has suggested there could be fresh strikes next year despite securing a 22 per cent pay deal this week, LBC reports.
Co-chairman of the junior doctors committee of the British Medical Association (BMA) Robert Laurenson claimed the “window of opportunity [for strikes] is about 12 months away” because Labour is in a “honeymoon period”.
The BMA recommended that members should accept Wes Streeting’s offer, which included a pay rise of 4.05 per cent and an increase between 8.8 and 10.3 per cent.
But Mr Laurenson said that the union could consider a “long sustained” strike in the next months.
He said: “Now the last two years the strategy was based on a general election and trying to extract a deal from a desperate chaotic government in decline.
“I think the only way to extract a better deal would be to take long sustained action for probably the next 12 months.”
He added the BMA’s strategy was “based on a general election and trying to extract a deal from a desperate chaotic government in decline.”
The union leader said: “I think the only way to extract a better deal would be to take long sustained action [strikes] for probably the next 12 months.”
Seven Just Stop Oil protesters arrested while trying to disrupt Heathrow Airport
Seven Just Stop Oil protesters have been arrested on suspicion of public order offences after blocking the passenger search area at Heathrow’s Terminal 5.
The protesters, who tried to disrupt access to the departure gates inside the airport at just before 9am on Thursday, were seen holding signs reading: “Oil Kills” and: “Sign the Treaty”.
Both the Metropolitan Police and Heathrow said minimal disruption was caused, and it is understood the demonstrators were removed within 20 minutes.
Passengers continued to access security lanes either side of where the group sat.
Scotland Yard said: “Seven Just Stop Oil protesters have been arrested on suspicion of public order offences after they blocked a passenger search area at Terminal 5, Heathrow.
“Officers swiftly attended and removed the protesters with minimal disruption caused.”
In full: Rachel Reeves confirms taxes will rise in her first budget in October
Taxes will have to rise in October to plug a £22bn hole in the public finances, Rachel Reeves has warned.
Ahead of her first budget, the chancellor refused to rule out hiking capital gains and inheritance tax and pursuing pension reform to fill the gap. And, setting the scene for a brutal financial statement, she said: “I think that we will have to increase taxes in the budget.”
The warning comes after she scrapped a series of infrastructure projects and announced the winter fuel allowance for pensioners would be means-tested in a bid to address the black hole left by the Conservatives.
Our political correspondent Archie Mitchell has the full report:
Source: independent.co.uk
