The Bank of England (BOE) implemented the second interest rate cut in this cycle. It cut its benchmark interest rate by 25 basis points to 4.75%. The decision by the committee was eight to one. The first rate cut took place in August.

The BOE chose not to move rates at the last meeting in September. BOE Governor Bailey said that “we need to make sure inflation stays close to target, so we can’t cut interest rates too quickly or by too much.” British inflation has decelerated sharply since peaking two years ago. In September consumer prices were up 1.7% from a year earlier, below the BOE’s target of 2%. However, that partly reflected a sharp decline in energy prices. Once energy prices stabilize, the BOE expects inflation to rebound slightly in the months to come. Bailey said that he expects the BOE to cut rates gradually in the months to come, provided that the economy evolves as expected.

Meanwhile, the BOE is likely evaluating the impact of the British government’s latest budget plan. Central banks in the United Kingdom, Eurozone, Canada, Japan, and the United States conduct monetary policy independently. However, their decisions are often taken with an eye of government fiscal policy, which can affect such things as borrowing costs, economic growth, and inflation.