Some excitement on Threadneedle Street today after the Bank of England cut interest rates to 4 per cent. The Bank’s Monetary Policy Committee (MPC) has just voted five to four – after a revote – for what is the third cut this year. This takes interest rates back down to levels not seen since the beginning of 2023. Concerns about an increasingly slack labour market seem to have driven the MPC’s decision.

This sounds like good news – and Starmer will welcome it as such – but the Bank’s apparent comfort with loosening policy in this context is baffling says Michael Simmons. Its own forecasts show inflation climbing back to 4 per cent by September – double the official target. If they’re wrong, and inflation slips the leash again, it won’t be brought back under control easily. This also coincides with yesterday’s news that the National Institute of Economic and Social Research (NIESR) forecast that Rachel Reeves must find £50 billion of revenue or cuts if she is to return to the £9.9 billion of fiscal headroom she left herself in the spring. Are there any rays of light escaping from the black hole as we head towards autumn’s Budget, or is it all gloom?

Also on the podcast today: Trump’s tariffs have come into effect across the world. He declared on Truth Social that ‘Billions of Dollars have started flowing into the US’… but is that true? And what’s been the reaction in the US?

Oscar Edmondson speaks to Michael Simmons and Kate Andrews.

Produced by Oscar Edmondson and Patrick Gibbons.

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