The Bank of England has cut its main interest rate by a quarter of a percentage point after inflation across the U.K. fell below its target rate of 2%.

The Bank of England has cut interest rates to 4.75 per cent after inflation fell to a three-year low in September. The eight-to-one decision to cut the base rate by 0.25 percentage points was in line with the expectations of economists polled by Reuters.

The Bank cut interest rates to 4.75% from 5% in a move that had been widely expected. But it indicated that while the extra spending outlined in the Budget would initially boost growth, measures such as raising the cap on bus fares and VAT on private school fees would push prices up at a faster rate.