Bank of England cuts interest rates to 5% in first drop since March 2020

The Bank of England has cut interest rates from 5.25% to 5%, the first drop since the onset of the pandemic in March 2020.

The Bank of England's rate setting committee voted by a majority of five to four to reduce the rate.

The base rate is closely followed as it heavily influences the rates set by High Street banks and money lenders.

Interest rates were hiked in the last few years in a bid to combat the pace of price rises, known as inflation.

High rates have led to people paying more to borrow money for things such as mortgages and loans, but savers have also received better returns.

There will be some relief for many homeowners and movers, although most are now stuck on fixed rate mortgages.

Businesses can start to anticipate cheaper investment funding. 

The government borrowing forecasts should also start to improve.