Chancellor Rachel Reeves welcomes the cut, but says she is "under no illusion about the scale of the challenge facing households".

The central bank said future cuts would be gradual amid higher inflation forecasts after the new government introduced spending and tax increases in its budget.

The outcome of the Monetary Policy Committee meeting was announced at midday today. Stay up to date with live reporting and analysis from the team at MoneyWeek.

The Bank of England has cut its main interest rate by a quarter of a percentage point after inflation across the U.K. fell below its target rate of 2%

The Bank of England has cut interest rates for the second time this year, in good news for mortgage-holders and other borrowers.Policymakers at the Bank of England opted to reduce interest rates to 4.

Interest rates are widely expected to be cut by the Bank of England on Thursday, in a move closely watched by businesses and consumers.Most analysts predict that the benchmark rate will fall from its current level of 5% to 4.

The Bank of England cut interest rates but pointed to the uncertainty facing the global economy from fresh trade barriers and Middle East conflict

The Bank of England cut interest rates on Thursday for only the second time since 2020 and said future reductions were likely to be gradual, seeing higher inflation and growth after the new government's first budget.

The Bank of England on Thursday said it was cutting its key interest further after UK inflation hit a three-year low and signalled more reductions, easing pressure on borrowers.

Official forecasts suggest inflation will be on course to hit the 2 per cent target within three years if rates fall to between 3.5 and 3.75 per cent by the end of 2025 The BoE thinks the Budget will boost growth and inflation,