In a divided decision, the Bank of England lowered its benchmark interest rate to 4%, citing economic weakness but warning that inflation—particularly from food prices—remains a major threat.
The Monetary Policy Committee’s vote was tight, and the Bank signaled that further cuts are possible but not guaranteed. Inflation has risen to 3.6%, higher than many had expected.
Reeves credited the rate drop to the government’s fiscal strategy. Yet, the Bank itself pointed to tax hikes and wage increases as part of the inflation puzzle, raising questions about policy coherence.
Food costs are set to rise 5.5% due to disrupted harvests, climate issues, and increasing labor expenses. This persistent pressure could stall progress on both inflation and growth fronts.
Interest Rate Drops, But UK Inflation Pressures Refuse to Cool
