BoE Interest Rates

• What is the primary aim of the Monetary Policy Committee (MPC)?

  To keep inflation at 2%
• Why were interest rates cut from 4.75% to 4.5%?

  To reflect progress in controlling inflation
• What is the expected inflation rate in Q3 2025?

  3.7%
• What temporary factors are expected to affect inflation?

  Energy costs
• How has economic growth been described recently?

  Weaker than expected
• What is happening to business and consumer confidence?

  It has declined
• What does it mean that the labour market is easing?

  Fewer labour shortages
• What is happening to productivity growth?

  It is slowing
• What will the MPC do if inflation risks decline?

  Gradually reduce interest rates further
• Why did the Bank of England cut interest rates?

  Inflation is moderating
• What external shocks have eased, contributing to the rate cut?

  Energy price spikes
• Why was a more aggressive rate cut not implemented?

  Inflation is still above target
• What is the current inflation rate mentioned?

  2.5%
• What could happen if rates are cut too quickly?

  Higher inflation could return
• What is happening with GDP growth?

  It has been weaker than expected
• What does a cooling labour market indicate?

  Fewer job vacancies
• What is the impact of slowing productivity growth?

  Harder for the economy to expand efficiently
• What will the MPC do before making further rate cuts?

  Monitor inflation and economic data
• What might the MPC do if the economy slows down too much?

  Cut rates further to boost demand
• What could happen if inflation stays high?

  Rates may be kept higher for longer
• How do interest rate changes affect individuals?

  • Borrowing costs fall → Cheaper loans and mortgages
  • Savings returns fall → Lower interest earned on deposits
  • Investment might increase → Cheaper for businesses to expand