The Bank of England cut interest rates on Thursday for only the second time since 2020 and said future reductions were likely to be gradual as it predicted the British government's first budget would lead to higher inflation and economic growth.

The Bank of England last night warned that Britain is facing a fresh spike in inflation as Rachel Reeves’s tax-and-spend Budget piles extra pressure on to households and businesses.Lenders have been raising mortgage costs in recent days despite the Bank’s highly anticipated interest rate cut to 4.

Chancellor of the Exchequer Rachel Reeves was left with £18 billion ($23 billion) less headroom in her spending plans after the UK’s fiscal watchdog made an error, potentially fueling investor concerns about her first budget.