Market News

Summary

• The Bank of England has cut interest rates from 4.75% to 4.5% - the lowest base rate since June 2023

• The Bank's Monetary Policy Committee voted 7-2 in favour of the cut - those two members wanted a bigger cut, to 4.25>#/p###

• Cutting the rate makes borrowing cheaper and is intended to boost spending - but a lower rate can lead to smaller returns for savers

• The Bank also cuts its growth forecast for the UK economy in 2025 from 1.5% to 0.75%

• And it says inflation will rise to 3.7% later this year - overall, it's a far from happy set of figures for Chancellor Rachel Reeves, writes our economics editor Faisal Islam

• Reeves welcomes the interest rate cut, but says "I am still not satisfied with the growth rate"

What does this mean for you and your money?

1. Kevin Peachey Cost of living correspondent

   Andrew Bailey says the UK economy is facing some bumps in the road - but to ordinary billpayers they'll seem more like bollards.

   Rising water bills and the prospect of higher domestic energy prices will be a worry as people continue to juggle their finances.

   Even though mortgage rates may fall, a huge number of people re-mortgaging still won't get as good a fixed deal as their current rate.

   The silver lining to these clouds is that Bailey says higher inflation is only temporary, and the broader trend is a slowdown in the rate of rising prices.

   He also pointed to earnings rising - although it is worth noting benefit payments will see a comparatively smaller increase in April.

   Overall, he says the impact of what's happening on the cost of living "concerns" him, but fears may now be heightened among those without any wriggle room in their financial situation.

At midday, the Bank of England cut interest rates from 4.75% to 4.5% - but that's not all we learned today:

• The Bank's base rate is now at its lowest since June 2023 - and two of the nine committee members voted for a bigger cut
• The Bank also cut its growth forecast for the UK economy from 1.5% to 0.75% for this year
• Inflation is forecast to rise, peaking at 3.7% later this year, which the Bank says is due to increases in the cost of energy, water and bus fares
• The forecasts say inflation will reach the Bank's 2% target towards the end of 2027 - about six months later than previously thought
• On the reduced growth forecast, PM Keir Starmer says: "We were never going to turn this around in six or seven months - that just spurs us on"
• The Conservatives say the "disastrous Budget is likely to mean fewer rate cuts this year than previously anticipated"
• We're ending our live coverage soon. You can read our main story here, and a handy explainer here.