Bank of England Cuts Rates to 4.25% Amid Trade Tensions, Signals Economic Slowdown

The Bank of England has slashed its benchmark interest rate by 25 basis points to 4.25%, marking its first reduction this year. The MOVE reflects mounting concerns over global trade tensions fueled by recent US tariffs and a deteriorating economic outlook.

Monetary Policy Committee members warned the UK economy faces an additional 0.3% contraction over three years, compounding earlier forecast downgrades. Governor Andrew Bailey cited heightened global uncertainty as trade policy clouds gather over Britain’s growth prospects.

The decision delivers a blow to Chancellor Rachel Reeves, with the central bank projecting near-stagnant economic activity through year-end. This fourth rate cut since August 2024 underscores the fragile state of post-pandemic recovery as monetary policymakers navigate turbulent trade winds.