The Bank of England in London, Britain, Aug. 6 (EPA)
The Bank of England in London, Britain, Aug. 6 (EPA)

The Bank of England cut interest rates from 4.25 percent to 4 percent on Thursday.

The Bank’s Monetary Policy Committee (MPC) was split in its decision on interest rates, leading to its members holding two votes for the first time in its history.

Initially, four of the nine-person committee wanted rates to be reduced by 0.25 percentage points to 4 percent, while four wanted to keep rates unchanged, and one member preferred a bigger 0.5 percentage point cut.

This meant the committee was forced to hold a second vote in order to secure a majority, which resulted in the MPC voting five to four to cut rates to 4 percent.

Governor Andrew Bailey said it was a “finely balanced decision”, adding: “Interest rates are still on a downward path, but any future rate cuts will need to be made gradually and carefully.” UK inflation will be higher than previously expected over the next few years, while economic growth will be stronger in 2025, the Bank of England also forecast on Thursday.

The consumer prices index (CPI) inflation is projected to peak at 4 percent in September, up from a previous estimate of 3.5 percent as the impact of higher food and energy prices takes effect.

CPI is set to average at 2.5 percent in 2026 and 2 percent in 2027, up from a respective 2 percent and 1.75 percent when the Bank last set out its forecasts in May.

Meanwhile, gross domestic product (GDP) is expected to rise by 1.25 percent over 2025, up from the 1 percent it previously projected. (DPA - Yonhap)