Bank of England lowers its main interest rate by 0.25%, to 5%, its first cut in over 4 years

LONDON (AP) — The Bank of England has cut interest rates for the first time since the onset of the COVID-19 pandemic in early 2020 as inflationary pressures in the economy have eased.

In a statement Thursday, the bank said that by a 5-4 margin, its policymaking panel backed a quarter-point reduction in its main interest rate to 5%, from the 16-year high of 5.25%.

It's the latest central bank to cut interest rates following a long stretch of increases. The U.S. Federal Reserve has yet to take the step but many think it will be ready to next month.

Many economists thought that the Bank of England, which is independent of government, would join the Fed in keeping rates on hold once again given persistent price pressures in the services sector, which accounts for around 80% of the British economy.

Though those concerns remain, certainly among the four opting to keep borrowing rates on hold, the majority on the panel think the hard medicine of higher borrowing costs has worked, with inflation in the U.K overall down at the bank’s target of 2%.

“Inflationary pressures have eased enough that we’ve been able to cut interest rates today,” said Bank Gov. Andrew Bailey, who voted for a cut. “But we need to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much. Ensuring low and stable inflation is the best thing we can do to support economic growth and the prosperity of the country.”

Bailey's comment suggests that interest rates will not be falling dramatically over coming months, certainly nowhere near the pace that the bank had hiked them in recent years.

Central banks around the world dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up during the pandemic and then because of Russia's full-scale invasion of Ukraine which pushed up energy costs.

Though no one is anticipating rates to fall to those previous lows, there are widespread expectations that the bank will cut again in coming months, especially as its forecasts suggest inflation will be below target in the next couple of years, despite a modest increase in the second half of the year.

“But ultimately it is the data that will determine how interest rates evolve from here, with the bank hoping its conviction that underlying inflation pressures are fading will be vindicated,” said Luke Bartholomew, deputy chief economist at abrdn, formerly known as Aberdeen Asset Management.

The cut — and the potential of future cuts — are welcome news to millions of mortgage holders, certainly those whose borrowing costs track the bank's headline rate, though it will likely mean that the savings rates offered by banks will be reduced.

David Hollingworth, associate director at L&C Mortgages, said the prospect of further rate cuts will help boost consumer confidence and that could help the housing market.

“That will be important reassurance to many that have been scarred by the turbulent and volatile periods in the mortgage market over the last couple of years," he said.

Higher interest rates — which cool the economy by making it more expensive to borrow — have helped ease inflation, but they’ve weighed on the British economy, which has barely grown since the pandemic rebound.

Critics of the Bank of England say it has being overly cautious about inflation in recent months and that it had maintained high interest rates for too long, unnecessarily harming the economy. Borrowing costs had been held at 5.25% since August last year, even though inflation was clearly on a downtrend while the economy stagnated.

It is a charge that’s also been leveled against the U.S. Federal Reserve, which kept rates unchanged on Wednesday. It is widely anticipated that the Fed will

Other central banks, including the European Central Bank, have opted to cut rates but are doing so cautiously.

The Bank of England in London, Thursday, Aug. 1, 2024. Economists are divided as to whether the Bank of England, which is independent of government, will cut its main interest rate by a quarter-point from the current 16-year high of 5.25%, or hold off until September.(AP Photo/Alberto Pezzali)

Andrew Bailey, Governor of the Bank of England, gestures as he addresses the media during a press conference at the Bank of England in London, Thursday, Aug. 1, 2024. The Bank of England has cut interest rates for the first time since the onset of the COVID-19 pandemic in early 2020. In a statement Thursday, the bank said that by a 5-4 margin, its nine-member policymaking panel backed a quarter-point reduction in its main interest rate to 5%, from the 16-year of 5.25%. (AP Photo/Alberto Pezzali, Pool)

The Bank of England in London, Thursday, Aug. 1, 2024. Economists are divided as to whether the Bank of England, which is independent of government, will cut its main interest rate by a quarter-point from the current 16-year high of 5.25%, or hold off until September.(AP Photo/Alberto Pezzali)

Andrew Bailey, Governor of the Bank of England, gestures as he addresses the media during a press conference at the Bank of England in London, Thursday, Aug. 1, 2024. The Bank of England has cut interest rates for the first time since the onset of the COVID-19 pandemic in early 2020. In a statement Thursday, the bank said that by a 5-4 margin, its nine-member policymaking panel backed a quarter-point reduction in its main interest rate to 5%, from the 16-year of 5.25%. (AP Photo/Alberto Pezzali, Pool)

The Bank of England in London, Thursday, Aug. 1, 2024. Economists are divided as to whether the Bank of England, which is independent of government, will cut its main interest rate by a quarter-point from the current 16-year high of 5.25%, or hold off until September.(AP Photo/Alberto Pezzali)

LOS ANGELES (AP) — The Los Angeles Rams are off to their first 0-2 start to a season since before Les Snead became their general manager 12 years ago.

They're coming off their worst loss under coach Sean McVay, a 41-10 thrashing from an Arizona Cardinals team the Rams had thoroughly dominated in McVay's eight-year career.

The Rams' extensive injury problems already encompass their top two receivers, their entire offensive line and two key members of their secondary.

And now they're about to play their biggest rivals and toughest opponents in McVay's career: The powerhouse San Francisco 49ers visit SoFi Stadium on Sunday.

Outside of an injury to Matthew Stafford, who's fully healthy, it's tough to imagine a way in which the first two weeks could have gone a whole lot worse for McVay or the team he led to six winning records in his first seven seasons.

“This league, nobody cares,” McVay said. “I feel terrible for those (injured) guys, and we certainly care, but the outside world doesn’t, and the games are going to go on.”

The Rams have fallen apart just two weeks into a season that began with hopes of playoff contention, even without retired star Aaron Donald.

Instead, the Rams are struggling to field a competitive team after just two games. The whole scenario has strong echoes of the 2022 season, when McVay's team went 5-12 amid major injury woes in the worst season by a defending Super Bowl champion in NFL history.

Several of the Rams' most important players will watch Sunday's game in street clothes. The injured list now includes receivers Puka Nacua (knee) and Cooper Kupp (ankle); starting offensive linemen Steve Avila (knee), Jonah Jackson (shoulder) and Joseph Noteboom (ankle); and starting defensive backs Darious Williams (hamstring) and John Johnson (shoulder). Several other key contributors will be playing hurt, including starting offensive linemen Kevin Dotson and Rob Havenstein.

“We’ve had some unfortunate breaks,” McVay said drily. “It’s nothing like I’ve been exposed to. This is unique, but this is an opportunity for us to be what we say we want to be.”

The Rams addressed their defense in last spring's draft, and the earliest returns are promising. Snead used his top two picks on Florida State's Jared Verse and Braden Fiske, and both have been key contributors in the front seven. Verse is already a problem on the edge, with four tackles for loss, a sack and a forced fumble in his first two NFL games. Third-round safety Kam Kinchens could be up for more playing time in Johnson's absence as well.

The Rams rebuilt their offensive line in the offseason to be tough up the middle, protecting Stafford and keying their running game. With two of those interior O-line starters out and a third playing injured, that plan will have to be set aside indefinitely. No team can have a backup plan for as many injuries as the Rams are facing on the line, but their backup tackles have not been sharp. They'll count on rookie Beaux Limmer, who played every snap at center last weekend, to step up again in Jackson's absence.

Safety Quentin Lake has led the Rams in tackles in each of the first two games, although that's also a criticism of Los Angeles' poor play at the line of scrimmage, as McVay noted. The Rams have allowed 394 yards rushing already this season.

The Rams' decision to dump linebacker Ernest Jones right before the regular season for a minuscule 2026 late-round draft pick upgrade looks even weirder now that Troy Reeder and Christian Rozeboom are struggling to fill his shoes with much less ability and talent. McVay and Snead have yet to provide an explanation for why the Rams didn't just allow their leading tackler to play out his rookie contract for 2024, and Los Angeles' linebacker play has been noticeably bad.

On top of the new injuries for Kupp, Jackson and Johnson, Rams rookie kicker Joshua Karty injured his groin. McVay said that injury isn't thought to be serious.

32 — The Rams' NFL rank in total defense after allowing 426.0 yards per game this season. Everyone suspected the defense would need a complete reset after losing Donald and coordinator Raheem Morris, but rookie coordinator Chris Shula's group has been bad, even with marginally better injury luck than the offense.

The Rams will be significant underdogs against the Niners, who have won 10 of McVay's past 13 regular-season meetings with Kyle Shanahan. If they can avoid losing several more starters to injury, they'll have a chance to regroup against less daunting opponents in the following few weeks.

AP NFL: https://apnews.com/NFL

Los Angeles Rams wide receiver Tyler Johnson (18) runs against the Arizona Cardinals during the first half of an NFL football game, Sunday, Sept. 15, 2024, in Glendale, Ariz. (AP Photo/Ross D. Franklin)

Los Angeles Rams quarterback Matthew Stafford (9) throws in the pocket against the Arizona Cardinals during the first half of an NFL football game, Sunday, Sept. 15, 2024, in Glendale, Ariz. (AP Photo/Ross D. Franklin)

Los Angeles Rams wide receiver Tutu Atwell (5) makes a catch against Arizona Cardinals safety Jalen Thompson (34) during the second half of an NFL football game, Sunday, Sept. 15, 2024, in Glendale, Ariz. (AP Photo/Rick Scuteri)

Arizona Cardinals quarterback Kyler Murray (1) runs out of the pocket against the Los Angeles Rams during the second half of an NFL football game, Sunday, Sept. 15, 2024, in Glendale, Ariz. (AP Photo/Rick Scuteri)

Los Angeles Rams running back Kyren Williams (23) scores a touchdown against the Arizona Cardinals during the second half of an NFL football game, Sunday, Sept. 15, 2024, in Glendale, Ariz. (AP Photo/Ross D. Franklin)