Bank of England Slashes Interest Rates Amid Global Economic Turbulence

The Bank of England has reduced its main interest rate by 0.25%, citing global trade tensions aggravated by U.S. tariffs. Despite diverging opinions among its policymakers, the decision reflects concerns over economic growth and inflation in Britain. The move marks the first adjustment post recent U.S. tariff impositions.

The Bank of England (BoE) lowered its key interest rate by 0.25 percentage points to 4.25% on Thursday, citing global trade tensions exacerbated by U.S. President Donald Trump's tariffs. The decision saw an unusual divide among policymakers, indicating mixed views on economic prospects and inflationary pressures in Britain.

Two Monetary Policy Committee members proposed a more aggressive half-point cut, while others recommended maintaining the status quo. This rate adjustment marks the BoE's first response since Trump's April tariff announcement, which disrupted markets and led the IMF to downgrade growth forecasts for major economies, including the UK.

Following the announcement, short-term UK government bond yields surged, and the British pound slightly strengthened against the dollar. With the ongoing unpredictability of global and domestic economic factors, the BoE maintains a cautious approach, as future rate cuts may hinge on evolving economic circumstances.

(With inputs from agencies.)