At its meeting on Wednesday 7 May, the Monetary Policy Committee (MPC) voted a majority of 5–4 to reduce interest rates from 4.5% to 4.25%, the lowest rate since May 2023.
Two members preferred to reduce the rate by 0.5 percentage points, to 4%, while two members voted to maintain the number at 4.5%.
UKHospitality (UKH) chief executive Kate Nicholls said: “This cut to interest rates is positive for hospitality businesses.
Forward-looking approach
“Many venues are still paying back Covid loans and have been suffering under high interest rates, as well as continuing to grapple with the £3.4bn in additional annual cost that was placed upon them last month."
The MPC said it had adopted a medium-term and forward-looking approach to determine the monetary stance required to achieve the Government’s 2% inflation target sustainably.
In addition, the Bank said: “Underlying UK GDP growth is judged to have slowed since the middle of 2024, and the labour market has continued to loosen”.
However, Nicholls cautioned the Bank needed to meet the Government’s expectations of further cuts to interest rates later this year in order to drive economic growth.
Productive growth
She continued: “Driving economic growth is rightly the Government’s focus and it’s clear that the markets are anticipating further cuts to interest rates this year. It’s important the Bank of England meets those expectations.
“This will be absolutely vital for hospitality businesses to fulfil their ability to support our communities, create local jobs and drive socially productive growth.”
Previously, the committee held interest rates at 4.5% due to geopolitical uncertainties.
The MPC will next meet on Wednesday 18 June with an update on interest rates set to be published on Thursday 19 June.
