Weak jobs market and above-target inflation will dent Reeves’s growth plans and may wipe out fiscal headroom

• Bank cuts rates to 4.5% and halves UK growth forecast
• What does the rate cut mean for mortgages and savings?

Keir Starmer said Thursday’s quarter-point rate cut from the Bank of England would be welcomed by many voters who would see “more money in their pockets”. The prime minister is right, at least when it comes to borrowers on floating-rate mortgages, and Labour will be glad the nine-member monetary policy committee (MPC) has signalled clearly it is in cutting mode.

The Bank’s governor, Andrew Bailey, said the MPC would be “taking a gradual and careful approach to reducing rates further” – and the fact that two of the MPC’s nine members wanted a larger, half-point cut signals more to come.