Bank of England reduces base rate by 0.25%: Hymans Robertson comments

Commenting on today’s base rate change of 0.25% announced by the Bank of England, Chris Arcari, Head of Capital Markets says:

“As predicted the Bank of England (BoE) have today announced a 0.25 % pa cut, with the likelihood of furthers cuts to follow, taking the base rate to 4.0% pa by year-end. The BoE is going to have to walk a tightrope in the year ahead. The economy is stagnating, and the announced National Insurance (NI) increase has driven growth and inflation in opposite directions: employment intentions have fallen while expected price growth and services output prices have risen, as employers cut back recruitment or look to pass on the NI increase via prices. Should weaker employment growth result in dwindling domestic demand and a larger output gap, reducing inflation pressure, we expect the BoE to cut rates more quickly. However, if inflation pressures persist, despite the weak growth backdrop, the central bank is likely to stay cautious.”

Commenting on today’s base rate change of 0.25% announced by the Bank of England, Andre Ranchin, Corporate Investment Consultant says:

“Pension scheme employers will be keen to keep their fingers on the pulse as many schemes approach their endgame and movements in financial markets are likely to prompt adjustments to their investment strategy. The first base rate cut of 2025 of 0.25% will be an event of note for many pension schemes who are in the process of adapting to a higher yield environment, and protecting their asset portfolios against downside risk such as inflation. The impact of the further predicted cuts this year remains to be seen.”