The Bank of England has cut interest rates by a quarter percentage point to 5%, marking the first reduction in over four years. This decision ends the joint-longest period of stable rates since the Bank gained independence in 1997. The nine-member Monetary Policy Committee (MPC) voted five to four in favour of the cut. Lower interest rates will impact many savings accounts and floating rate mortgages immediately, though fixed rate mortgages had already anticipated this change. The rate cut follows a drop in the consumer price index rate of inflation to 2%, the MPC’s target. However, the Bank's updated forecasts indicate that inflation will rise to around 2.75% by the year's end. Governor Andrew Bailey cautioned that while inflationary pressures have eased, rates should not be cut too quickly to maintain stable inflation and support economic growth. The forecasts will be reviewed after the new chancellor’s budget announcement in October.