The Bank of England has cut the base rate by 0.25% from 4.75% to 4.5%.

The rate-setting Monetary Policy Committee voted in an 7 to 2 split in favour of cutting the rate, which affects a wide range of consumer loan agreements from credit card to mortgage payments.

Last week, most traders bet that the BoE rate-setters would have little choice but to cut the rate.

The market predicted an 84% chance of a cut at the MPC’s first meeting of the year, and then two more cuts in 2025.

Both Goldman Sachs and Deutsche Bank forecast that the committee would vote 8-to-1 to bring down the rate by 0.25% to 4.50%.

In the last MPC meeting of 2024, the committee decided to hold the interest rate at 4.75%.

In November, the MPC decided to cut the rate from 5% to 4.75%, marking the second rate cut since August when it lowered from 5.25% to 5%.