The Bank of England lowered its benchmark interest rate by a quarter-percentage point to 4%, the fifth cut in a year and the lowest level since early 2023. The Monetary Policy Committee reached the decision only after an unprecedented second round of voting, emerging with a narrow 5–4 majority when external member Alan Taylor switched from advocating a 50-basis-point reduction to support the smaller move. Governor Andrew Bailey said borrowing costs remain on a 'downward path' but pledged that any further easing will be executed 'gradually and carefully.' Four policymakers—Megan Greene, Clare Lombardelli, Catherine Mann and Chief Economist Huw Pill—argued to keep rates unchanged, underscoring deep divisions over how to tackle inflation that has stayed above the 2% target for more than four years. Alongside the cut, the central bank raised its near-term inflation outlook, projecting consumer-price growth to peak at 4% in September, up from a 3.7% forecast in May, and now expects the target to be reached only in the second quarter of 2027. Officials cited softer economic activity and a cooling labour market, hit by higher payroll taxes and U.S. tariff uncertainty, as justification for easing while warning that upside risks to prices 'have moved slightly higher.' The reduction takes U.K. rates below those set by the Federal Reserve and offers limited relief to mortgage holders and other borrowers, though savers face slimmer returns. Money-market pricing implies little further action this year as the committee weighs the impact of elevated food and energy costs against signs of slack in the economy.