Bank of England cuts rates but sees higher inflation after Reeves' budget

The Bank of England has cut its main interest rate by a quarter of a percentage point after inflation across the UK fell below its target rate of 2 per cent. In an announcement Thursday, the bank said its rate-setting panel lowered the benchmark rate to 4.75 per cent. That is its second cut in three months and follows a sharp decline in inflation over the past year. Central banks worldwide dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up and then because of Russia's full-scale invasion of Ukraine which pushed up energy costs. As inflation rates have recently fallen from multi-decade highs, the central banks have started cutting interest rates. The US Federal Reserve is also expected to cut interest rates later Thursday. Economists warn that worries about the future path of prices following last week's tax-raising budget from the new Labour government and the econo