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Bank of England policymakers speak on rate cut following narrow vote
Published by Global Banking & Finance Review®
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on August 7, 2025
3 min readLast updated: January 22, 2026
The Bank of England reduced rates to 4% amid inflation concerns, with a divided vote among policymakers. Future rate directions remain uncertain.
LONDON (Reuters) -The Bank of England cut interest rates to 4% from 4.25% on Thursday but four of its nine policymakers - worried about high inflation - sought to keep borrowing costs on hold.
Here's what Bank of England officials said in a press conference following that decision:
ANDREW BAILEY, BANK OF ENGLAND GOVERNOR
On the direction of inflation:
"Domestic price and wage pressures have generally continued to abate in recent months, and that's allowed us to take another step today in reducing bank rates. But the picture is more complex than that."
"There are good reasons to think that this rise in headline inflation will not persist."
"Our job is to ensure that inflation falls back to the 2% target once these temporary factors pass, as we expect to see. So it remains important that we do not cut bank rate too quickly or by too much."
"Food and energy prices are salient to consumers and often affect inflation expectations more than other prices, so we have to be very careful that this does not lead to any additional second round effects on wage and price setting in the economy."
On the direction of rates:
Asked if rates were definitely still on a downward path: "Yes... I do think the path continues to be downward."
"There is, however, genuine uncertainty now about the course of that direction of rates. I'll be honest with you, the point I was making is that I think that the path has become more uncertain."
On recession worries:
"My vote was not, I should say, motivated by my concerns about a risk of recession."
On UK bonds:
"The steepening of curves that we've see ... across this year, is actually a phenomenon that we've seen across major government bond markets. So... I don't think there's a particularly UK story going on."
On business investment:
"There is, of course, a higher level of uncertainty at the moment...and of course, that tends to map through into businesses responding to greater uncertainty by delaying investment decisions. That's a reasonably well established feature, and I certainly pick that up when I go around the country."
On U.S. Federal Reserve Chair Jerome Powell:
"Jay Powell is a friend of mine, obviously we are very close, we work very closely together, and, I'll say this again, he is a man of the utmost integrity."
"I'm really not going to comment on what's going on in the U.S. other than to comment on somebody who obviously I do know very well and I respect very much."
DAVE RAMSDEN, BANK OF ENGLAND DEPUTY GOVERNOR
On neutral interest rate:
"It's in a range of 2% to 4%, within that MPC members have a range of views."
(Reporting by Alistair Smout and UK bureau, editing by Sarah Young)
The Bank of England cut interest rates to 4% from 4.25%.
Four of the nine policymakers were worried about high inflation and sought to keep borrowing costs on hold.
Andrew Bailey noted that food and energy prices affect inflation expectations significantly, and they need to be cautious of second-round effects.
No, he clarified that his vote was not motivated by concerns about a risk of recession.
Dave Ramsden stated that the neutral interest rate is in a range of 2% to 4%, with varying views among MPC members.
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