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The has cut its central interest rate to 4.25%, marking its second reduction this year, amid mounting concerns over a potential global trade war and a deteriorating economic outlook. The Bank's nine-member Monetary Policy Committee (MPC) agreed on a 0.25% reduction on the base rate from 4.5%, in a 5-4 vote split.

The decision comes ahead of a trade deal between the US and the UK, which will likely lower the burden of President Donald Trump's sweeping tariffs. Andrew Bailey, governor of the Bank of England, said: "Inflationary pressures have continued to ease, so we've been able to cut rates again today."

The Bank also predicted that the UK economy would grow by 1% this year, upgrading its previous 0.75% forecast due to a strong start to 2025. However, it cut its UK growth forecast to 1.25% for 2026, from 1.5% in its February projections.

The base rate significantly impacts the cost of mortgages and loans and influences the interest rates banks offer on savings accounts. It peaked at 5.25% in late 2023, but policymakers have reduced it in the months since as inflation eased to more manageable levels. The Bank of England typically raises interest rates when inflation is high to curb spending and slow price increases.

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