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BoE needs two votes to cut rates, as divisions entrench in MPC

Date: 07 August 2025

2 minute read

7 August 2025

If you are covering the Bank of England’s decision to cut interest rates, please find below a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:

“With today’s cut in interest rates, the fifth in a year, it appears the Bank of England is getting increasingly concerned about the health of the UK economy. Unemployment is rising, while growth has ground to a halt once again after what now appears to have been a false dawn in the first quarter. As such, the BoE, while still concerned about its level, is putting inflation fears on the back burner as it looks to provide some relief to businesses and consumers.

“The market hopes the Monetary Policy Committee will pull the trigger again this year, but as the division on the last few decisions shows, even that might be put in doubt with any small change to the data. Today’s vote was on a knife-edge and required a second vote, with one member voting for a bigger rate cut, while four voted for no cut at all. This divergence in views makes interest rate decisions hard to forecast and highlights the difficult position the UK economy is in.

“The problem facing the UK is that the issues show no signs of abating. Speculation is rife about which taxes will be next to be raised at the upcoming Budget and that is likely to weigh further on growth and consumer confidence, just as it did last year. It is looking like some tax rises in the past year have backfired, with employers making job cuts and wealthier individuals leaving the UK.

“This should all point to a reduction in interest rates going forward too, just as we have seen in Europe. However, global trade policies still appear uncertain, and the UK is once again battling with inflation, when others in Europe are not. It is making the job for the BoE increasingly difficult as we continue to wait for some sort of economic corner to be turned.”

Gregor Davidson

Senior External Communications Manager