Borrowing costs reduced for second time this year with Fed expected to cut US rates later on Thursday

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The Bank of England has cut interest rates despite warning that Rachel Reeves’s budget will complicate its battle against high inflation by keeping the rate above its 2% target for a year longer than previously anticipated.

In a decision widely expected in financial markets, the Bank’s monetary policy committee (MPC) voted by a majority of eight to one to reduce the base rate from 5% to 4.75% to ease the pressure on households and businesses from high borrowing costs.