The Bank of England cut interest rates by 25 basis points to 4%, the lowest since March 2023. Five of the nine Monetary Policy Committee members backed a 25bps cut, while four voted for no change. Governor Andrew Bailey called it a “finely balanced” decision and reiterated that future cuts will be “gradual and careful.” It was the first time in the BoE’s history that two votes were needed to reach a majority on rates. The split highlights tension between rising inflation, now expected to peak at 4% in September, and signs of labour market strain after higher payroll taxes and minimum wage hikes. Since the Labour government’s tax changes, the economy has shed around 185,000 jobs. Still, growth forecasts for 2025 were nudged up to 1.25%. The BoE also flagged potential changes to its bond sales program next month, citing stress in long-dated gilt markets. Markets expect one more cut this year, with rates settling near 3.5% in 2026.