The Bank of England has announced a further reduction in interest rates to 4.25%, down from 4.5%, as part of its ongoing response to subdued economic growth and persistent inflationary pressures. The Monetary Policy Committee (MPC) voted 5-4 in favour of the cut, marking the third-rate reduction in less than a year. The move follows earlier cuts in August and November 2024 as well as February 2025, as the Bank seeks to support consumer spending and business activity amid a fragile economic outlook. Headline inflation has eased significantly from its 2022 peak of over 11%, now standing at 2.5%, closer to the Bank’s 2% target. However, policymakers warned that inflation could rise again in the second half of 2025, fuelled by higher energy prices and continued global supply chain disruptions. The Bank maintained a cautious tone, projecting UK GDP growth of around 0.8% in 2025, reflecting continued weakness in consumer demand and subdued business investment. Retail and automotive sectors remain under pressure due to cost-of-living constraints and tighter credit conditions. In its latest statement, the Bank reiterated its intention to take a “gradual and careful” approach to further rate changes, signalling that while additional cuts remain possible, they will be carefully considered in light of inflation risks. NFDA Chief Executive Sue Robinson commented on the rate reduction, noting that this decision will help to ease some of the pressure on both consumers and dealerships amid ongoing economic uncertainty. The MPC also acknowledged increasing risks from global economic tensions, particularly around trade and geopolitical instability, which could weigh further on UK exports and industrial activity. The rate cut reflects the Bank’s continued efforts to respond to inflation and growth challenges amid a shifting economic landscape.