The Bank of England should cut interest rates at least two more times in 2025 as part of efforts to bolster the UK economy, according to the International Monetary Fund (IMF).
As it stands, the central bank's base rate is sitting at 4.25 per cent, which is lower than the heights of 5.25 per cent seen in the wake of the Covid-19 pandemic.
Interest rates were hiked by the Bank to assist in easing the soaring consumer price index (CPI) rate of inflation, which has since eased to around 3.6 per cent.
The IMF is now calling on the Bank of England to lower the cost of borrowing as Chancellor Rachel Reeves attempts to bolster Britain's gross domestic product (GDP) growth.
The IMF has issued a warning to Rachel Reeves
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As well as this, the Washington-based think tank warned uncertainty remains over global trade policy in the wake of US President Donald Trump's sweeping tariffs.
This is despite the fact that Trump "Liberation Day" tariffs have been implemented with much lower rates than initially proposed.
In its latest economic outlook, the IMF stated: “Risks are tilted to the downside, Larger fiscal deficits or increased risk aversion could raise long-term interest rates and tighten global financial conditions.
"Combined with fragmentation concerns, this could reignite volatility in financial markets."
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The Chancellor has came under fire over her fiscal decisions
| GBNEWSUK GDP is projected to be slightly higher than previously projected this year, reaching 1.2 per cent.
However, Britain's growth forecast for 2026 is forecast to remain at the current estimate of 1.4 per cent.
Addressing the IMF's forecasts, the Chancellor noted these figures "show that the UK remains the fastest growing European economy in the G7 despite the global economic challenges we are facing".
Overall, the global economy is projected to grow by around three per cent in 2025, with 3.1 per cent growth forecast for 2026.
According to the IMF, economists predict the pace of rate cuts will be slower compared to just three months ago with the Bank of England likely to cut "around twice more this year after pausing to assess incoming data".
LATEST DEVELOPMENTS:
Bank of England holds interest rates at 4.25 per cent | MPC/GB NewsEarlier this month, Bank of England Governor Andrew Bailey warned that Rachel Reeves's tax changes in last year's Autumn Budget were hurting growth prospects.
Last year, the Chancellor unveiled a hike to the rate paid in National Insurance contributions by employers and confirmed pensions would soon become liable for inheritance tax.
Bailey noted that companies were "adjusting employment and hours, and also having pay rises that are possibly less than they would have been if the NICs change hadn’t happened".