12:19 pm, August 1, 2024
The Bank of England has cut interest rates for the first time in more than four years, easing pressure on borrowers.
Rates have been reduced from 5.25% to 5% as the bank said it was encouraged by signs that inflation had slowed.
Some members of the Monetary Policy Committee (MPC) had preferred to keep the level unchanged, however, leading to a split vote.
Governor Andrew Bailey, who voted for a cut, said ‘inflationary pressures have eased enough that we’ve been able to cut interest rates today’.
But he signalled that the central bank was going to be careful not to cut rates too quickly going forward.
Borrowing costs had been held at 5.25% – the highest level in 16 years – since August last year.
Thursday’s decision marks a turning point for the Bank, which has not implemented a rate cut since the onset of the Covid-19 pandemic in 2020.
It means that while rates remain elevated, mortgage costs could start to come down further while savings rates offered by banks could be reduced.
Commenting on the cut, Philip Nothard, insight director at Cox Automotive, said: ‘The Bank of England’s decision to reduce the base rate by 0.25% to 5.0% marks a positive turn for the automotive industry.
‘This reduction will lower the cost of vehicle purchases and ownership for consumers, making cars more affordable and accessible.
‘Businesses will benefit from reduced financing costs, encouraging investment and growth within the sector.
‘Additionally, decreasing the overall cost of living will boost consumer confidence and spending power, further stimulating demand for new and used vehicles.
‘This move by the BoE is a welcome relief for the industry, promising a brighter outlook for the coming months.’
Stuart James, CEO of the Independent Garage Association, said: ‘Today’s announcement from the Bank of England cutting the interest rate from 5.25% to 5% is positive news for our members at the Independent Garage Association and the sector as a whole.
‘This rate cut may help reduce borrowing costs and improve cash flow for independent garage owners, potentially making it easier for them to invest in their businesses.
‘It is a step that could support the growth and stability of garages across the country, assisting them in managing rising costs and maintaining their service to customers.’
