Bank cuts interest rates to 4.25% as tariff tensions put a damper on growth

THE Bank of England has cut interest rates to their lowest level for two years as it warned an escalating global trade war will drag on growth over the next three years.

- ANNA WISE AND HENRY SAKER-CLARK

The central bank cut the UK's base interest rate from 4.5% to 4.25% following a slowdown in inflation in recent months.

Andrew Bailey, governor of the Bank of England, said: "Inflationary pressures have continued to ease, so we've been able to cut rates again today."

Five members of the Bank's nine-strong Monetary Policy Committee voted for the 0.25 percentage point cut. Two members voted to hold rates at 4.5%, while a further two called for a sharp cut to 4%.

The Bank also predicted the UK economy will grow by 1% this year, upgrading its previous 0.75% forecast on the back of a strong start to 2025. However, yesterday it cut its UK growth forecast to 1.25% for 2026, from 1.5% in its February projections.