The Bank of England has lowered interest rates as expected. On Thursday, the bank cut rates by a quarter point to 4.75 percent. The bank’s leaders said it will take more time for inflation in Britain to reach the 2 percent target. This delay is due to the new government’s budget, which has increased spending and taxes.
The Bank of England has already cut rates twice since August. Before these cuts, interest rates were at a high level for about a year. Andrew Bailey, the governor of the bank, said, “We need to control inflation. We cannot cut interest rates too quickly.”
However, if the economy improves as the bank expects, rates may continue to fall slowly. One member of the rate-setting committee wanted to keep rates at 5 percent.
Even though inflation dropped to 1.7 percent in September, the bank is cautious about cutting rates. Officials worry that inflation may rise again, especially with rising gas and electricity prices. They want to make sure inflation does not stay high for a long time.
Vocabulary List:
- Inflation /ɪnˈfleɪʃən/ (noun): The rate at which the general level of prices for goods and services is rising.
- Interest /ˈɪntrəst/ (noun): The cost of borrowing money typically expressed as a percentage of the amount borrowed.
- Cautious /ˈkɔː.ʃəs/ (adjective): Careful to avoid potential problems or dangers.
- Committee /kəˈmɪt.i/ (noun): A group of people appointed for a specific function.
- Governor /ˈɡʌv.ən.ər/ (noun): The head of a specific governmental body or institution.
- Budget /ˈbʌdʒ.ɪt/ (noun): An estimate of income and expenditure for a set period of time.
