Copy article

Bank of England rate cut decision "has positively impacted the Pound so far"

ended 08. May 2025

The Bank of England today cut rates by 0.25% to 4.25%. In its minutes, it revealed five members (Andrew Bailey, Sarah Breeden, Megan Greene, Clare Lombardelli and Dave Ramsden) voted in favour of the proposition. Four members voted against the proposition. Two members (Swati Dhingra and Alan Taylor) preferred to reduce Bank Rate by 0.5 percentage points, to 4%. Two members (Catherine L Mann and Huw Pill) preferred to leave Bank Rate unchanged, at 4.5%. Newspage asked experts for their views on the decision and how the markets are reacting, below.

6 responses from the Newspage community

Copy all

Star Quote
Copy

Editor
Tony RedondoVerified
Founder at Cosmos Currency Exchange
Today’s 0.25% cut aims to stimulate the Uk economy without stoking inflation and will be seen by the markets as hawkish. The MPC’s division reflects a tricky balancing act. To cut rates more aggressively as two MPC members wanted to stimulate economic growth into the moribund UK economy, risks further igniting inflation, already forecast to nearly hit double the 2% target. Focusing on inflation by keeping rates unchanged as two MPC members wanted risks pushing the economy into recession. The immediate reaction should see a modest FTSE 100 rise with homebuilders, consumer discretionary, real estate, and corporate bonds benefiting as borrowing costs ease. Gold may face pressure. The Pound’s resilience hinges on how the global risks play out.
Star Quote
Copy

Editor
Gabriel McKeownVerified
Political & Economics Writer at Sad Rabbit - Substack Newsletter
This decision was broadly expected, and arguably long-overdue, yet the vote split suggests that the rate decision trajectory is far more debatable than many would have hoped. Given the expectation, this is unlikely to massively impact the pound in the short-term, however all eyes will be on how that vote split evolves in the next meeting, as that will be the biggest determinant of the pound’s fate.
Star Quote
Copy

Premium
Prem RajaVerified
Head of Trading Floor at Currencies 4 You
Today's rate decision saw a 25bps cut, which has positively impacted the Pound so far, with Sterling up 0.2% against both the Euro and the Dollar. This rate cut was heavily priced in so it came as no surprise to markets that the Bank of England opted to go down this route. For the rest of the year we are expecting potentially two more rate cuts at 25 bps apiece from Threadneedle Street, and we are expecting Sterling to continue performing well, especially against the U.S Dollar. And with today's rumours of a trade deal being announced between the UK and USA, this could fuel that strength even more.
Star Quote
Copy

Harry MillsVerified
Director at Oku Markets
As expected, the Bank of England's Monetary Policy Committee cut Bank Rate by a quarter-point to 4.25% on Thursday, but the decision, which passed with 7-2 votes in favour, wasn't unanimous as many analysts had predicted. Two voting members of the MPC dissented, preferring to hold rates steady, while two other members preferred a larger 50 basis point cut. The pound recovered earlier losses against the dollar and euro as the Bank of England reiterated that rates must "remain restrictive" until inflation falls to its 2% target. The MPC vote has almost fully reversed from the last meeting, which, coupled with the split in voting preferences this time, indicates an uneasiness and uncertainty in members' views on the economy and the required course for policy.
Copy

Editor
Justin MoyVerified
Managing Director at EHF Mortgages
Little will change with mortgage rates, given the bulk of fixed rate pricing is through money markets and not specifically the base rate improvement. Markets have already priced in a number of base rate cuts this year, reflected in recent improvements by lenders. What’s as important are the words and actions, such as how many voted for change, and whether today’s announcement will suggest we will see more cuts than was originally expected for 2025.
Copy

Editor
Scott GallacherVerified
Director at Rowley Turton
Given it's a modest, and not unexpected, rate cut, I can't see there being much reaction from the markets. Falling rates should aid fixed interest investments, especially for UK investors, and may help support UK consumer-based businesses such as retailers and house builders.