Newscasts - BoE cuts rates to 4.25% as it sees tariff hit to growth
08/05/2025 15:53
Click the following link to watch video: https://share.newscasts.refinitiv.com/link?entryId=1_1w5xh3es&referenceId=tag:reuters.com,2025:newsml_RW253508052025RP1_930&pageId=Newscasts Source: 'Reuters - Business videos' Description: The Bank of England cut its main interest rate by 0.25 percentage points to 4.25% on Thursday, despite an unexpected three-way split among policymakers as U.S. President Donald Trump's tariffs weigh on global economic growth. Francis Maguire reports. Short Link: https://refini.tv/4k8jzCL Video Transcript: The Bank of England cut its main interest rate on Thursday. It came down by a 0.25-point to 4.25%. That was despite a surprise three-way split among policymakers as US tariffs hit global economic growth. The Bank's rate-setters voted 5-4 in favor of the decision. Two members of the committee voted for a bigger cut, while others wanted the keep rates on hold. George Godber is a Fund Manager at Polar Capital. The cut is not a surprise. That was fully priced in. But what has been a surprise is that two members voted to hold rates. So, we’ve got two voting for a 50 basis points cut. The rest voting for this 25bps. So, it looks like a very, very confusing message. But I think the main thing is at the moment the Bank of England is on a trajectory for gentle cutting, that's likely to change later in the year. But, at the moment, that's really the message the market will take from this. Bank Governor Andrew Bailey said the central bank must stick to a gradual and careful approach to rate cuts. As the past few weeks demonstrate, the global economic environment remains an uncertain one. Interest rates are not on autopilot. They cannot be. Thursday's decision is the central bank's first since President Trump announced wide-ranging tariffs in early April. It caused temporary market turmoil and led the International Monetary Fund to cut its growth forecasts for most major economies, including Britain. The Bank of England said it thought tariff increases by the US and other countries would weigh somewhat on British economic growth. It further argued it would push down on inflation, but said the outlook is unclear.