4 min readThe BoE lowered interest rates by 25 basis points to 4.5%, in line with expectations. However, the vote was slightly more dovish than expected with 7 -2, with 7 voting to cut rates by 0.25% and 2 members preferred to reduce rates by 50 basis points.
The central bank signalled that it will keep easing monetary policy gradually in 2025 despite evidence of lingering inflation. Recent inflation data showed that UK inflation slowed to 2.5% YoY in December, down from 2.6%. The recent UK GDP data point suggested that the economy only grew by 0.1% in November, thus the BoE felt the economy has stagnated in recent months putting increased pressure on the Bank of England to reduce interest rates.
GBP VS DOLLAR (GBP/USD):
If we take a closer look at the technicals, we can observe how price was trading just above 1.2430 before the news release, and post the release we have seen price action push lower into the 1.2370 region. While the price trades -0.57% lower following the decision, and now down over 1% on the day.
FTSE 100 (UK100):
The FTSE 100 has also seen a direct impact from this BoE interest rate decision, as we saw price trading at just below 8700 before the announcement, and currently we are trading just above 8735. Marking a slight increase of over 0.54% within the hour.
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