Interest rate cut falls short amid sobering assessment of UK economy, says IPPR

Reacting to today’s decision by the Bank of England’s Monetary Policy Committee to cut interest rates to 4.25 per cent, Carsten Jung, head of macroeconomics at IPPR, said:

“Today all eyes were on how the Bank of England would assess the effect of tariff wars on the UK economy. Its sobering assessment is that we are entering a period of huge uncertainty. UK growth could be cut sharply by global economic woes, while higher trade costs may push up inflation.

“This uncertainty alone is pushing economic growth down. Businesses and investors are holding back spending. Lowering the interest rate was thus essential, but the Bank should have cut it by 0.5 percentage points, as two of the MPC members suggested. Waiting to take decisive action until declining growth directly impacts households is a mistake.”