The Bank of England (BoE) has cut its key interest rate by 25 basis points to 4%, marking the fifth reduction in the past 12 months and bringing the rate to its lowest level since March 2023. The decision, made at the Monetary Policy Committee (MPC) meeting ending August 6, 2025, was narrowly approved by a 5-4 vote after an initial 4-4-1 split that necessitated a rare second round of voting. Governor Andrew Bailey and four other members supported the quarter-point cut, while four policymakers preferred to keep rates unchanged, and one member initially advocated for a larger 50 basis point cut to 3.75%. The BoE indicated that inflation is expected to peak at 4% in September, up from a previous forecast of 3.7%, and highlighted ongoing inflationary pressures alongside subdued economic growth and elevated geoeconomic uncertainty. Despite the rate cut, the bank signaled caution, suggesting that the series of reductions may be approaching its end amid concerns over persistent inflation. The move is seen as an attempt to support borrowers, including homeowners, by lowering repayment costs amid a slowing economy and a jobs market affected by higher taxes. The decision places the BoE's base rate below that of the U.S. Federal Reserve, which market observers expect may follow with its own rate adjustments.