The Bank of England cut its key interest rate by 0.25% to 4.50% on Thursday, as expectations that inflation will rear up again ahead offset concerns about the UK's weak economic growth.
Seven members of the Bank's Monetary Policy Committee backed a 0.25% reduction, the central bank said on Thursday, while the other two had favoured a larger 0.5% cut.
MPC forecasts point to inflation climbing back up to 3.7% in the third quarter of 2025, with gross domestic product picking up from the middle of the year.
However, the Bank noted the reduction followed weaker-than-expected economic growth in November, as business and consumer confidence also declined.
“Based on the committee’s evolving view of the medium-term outlook for inflation, a gradual and careful approach to the further withdrawal of monetary policy restraint is appropriate,” it said.
“In addition to the risks around inflation persistence, there are also uncertainties around the trajectories of both demand and supply in the economy that could have implications for monetary policy.”