On Thursday, the Bank of England announced that it was cutting interest rates from 5.25% to 5% for the first time since the COVID-19 pandemic.

As the UK economy continues to emerge from the cost-of-living crisis that is affecting many families and businesses across the country, the news of this cut to interest rates will bring relief to many homeowners who are currently paying mortgages, as well as businesses seeking to borrow from a bank.

While this is welcome news, it should be taken with a pinch of salt in anticipation of an expected rise in CPI inflation from its target of 2%, particularly as a result of the announcements of pay rises for public sector workers; note that, as at the time of writing this article, core inflation remains the same, at 3.50%. This is often a catalyst of increased rates of inflation outwith other economic pressures.

Nevertheless, the renewed confidence in the economic health and growth from the Bank of England will likely have a trickle-down effect to consumers and businesses across the UK.