08 Nov 2024The Bank of England has cut interest rates for the second time this year as expected. The Bank's Monetary Policy Committee (MPC) voted by a majority of eight to one to reduce the base rate by 0.25 percentage points to 4.75%. The decision means rates are now at their lowest point in more than year. The last time rates were below 5% was June 2023. Alpesh Paleja, Interim Deputy Chief Economist at the Confederation of British Industry (CBI), said: 'While the worst of inflationary pressures are behind us, the MPC is treading an increasingly fine line. On the one hand, the CBI's surveys suggest that growth is already shifting down a gear. But on the other, some measures of domestic price pressures – notably services inflation – remain stubbornly high. 'That line has become even finer after October's Budget. The loosening in fiscal policy is set to stoke inflation a little further, with the resulting short-term boost to demand not matched by a boost to supply potential. The rise in employer NICs will also only add to the cumulative cost burden for businesses, exacerbated by higher interest rates over the last few years. 'On balance, the MPC is still likely to proceed with more rate cuts going forward. But renewed inflationary pressures underscore that the pace will likely be gradual, with the prospect of a faster loosening in monetary policy now fading.'