The Bank of England reduced its benchmark interest rate by a quarter-percentage point to 4%, marking a fifth cut in the past year and the lowest level since early 2023. Policymakers said the move aims to support a cooling economy and a labour market hit by higher taxes and global trade disruptions. The decision exposed an unprecedented split on the nine-member Monetary Policy Committee. An initial 4-4-1 stalemate forced a second ballot in which five officials—including external member Alan Taylor, who shifted from advocating a larger half-point cut—backed the 25-basis-point reduction, while four preferred no change. Governor Andrew Bailey said rates remain on a “downward path” but warned that any further easing will be “gradual and careful.” The Bank lifted its forecast for headline inflation to peak around 4% in September and does not expect price growth to return to the 2% target until mid-2027, citing persistent food costs even as economic growth stays subdued. Sterling rose and two-year gilt yields climbed after the closely fought vote, as traders scaled back expectations for additional cuts this year.