Bank of England (BoE), the UK's central bank, on Thursday cut its key lending rate by 25 basis points, or 0.25 per cent percentage point. After this cut, the UK's key lending rate came down to 4.75 per cent—the central bank's second such move this year after it started easing its monetary policy in August. The development comes before a key decision by the Federal Reserve, the American central bank, due later on Thursday.

BoE Cuts Key Rate by 25 bps | Here are 10 key things to know about this news: 

  • British equities recovered initial losses after the news, with the benchmark FTSE 100 index trading flat at the last count. The UK benchmark declined as much as 0.2 per cent earlier during the session. 
  • The Stoxx 600—which aims to capture the performance of equities in the European continent—was up 0.7 per cent. 
  • The Bank of England said that inflation had stayed close to its target after easing back to its 2 per cent target in May from a peak of just over 11 per cent in 2022.
  • "It’s working," the central bank said in a statement released on its official website.  
  • From 2021 to 2023, the British central bank had raised the rates to counter COVID-era inflation. 
  • "Easing inflationary pressures meant we were able to cut interest rates to 5 per cent in August... We are cutting interest rates again today," it said. 
  • However, the BoE also said that it expects inflation to rise "slightly again" over the next year, to around 2.75 per cent, but only to return to its 2 per cent target subsequently.  
  • "If inflation remains low and stable it’s likely that we will reduce interest rates further. But we have to be careful not to cut interest rates too quickly or too much. High inflation has affected everyone, but it particularly hurts those who can least afford it," said the BoE. 
  • The BoE's US counterpart, the Federal Reserve, is widely expected to announce a reduction in the key interest rate by the same magnitude in the current review. 
  • Globally, investors have been keenly awaiting signs of reversal in COVID-era increases in key interest rates. 

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