The decrease was expected and in line with market expectations, according to Bloomberg.
Five of the bank's members voted to lower, while four wanted to leave it unchanged.
Andrew Bailey signals that the way forward is uncertain and that caution is required.
"We must ensure that inflation remains low and be careful not to lower interest rates too quickly or too much. Ensuring low and stable inflation is the best we can do to support economic growth and the country's prosperity," he says.
This is the first interest rate cut in the UK since the beginning of the pandemic and inflation took off. The previous interest rate of 5.25 – which has been unchanged for a year after a series of hikes – has been the highest in 16 years.
The Bank of England, like the Swedish Riksbank and the American Federal Reserve (Fed), has an inflation target of 2.0 percent – and that is also where British inflation has been for two months.
Bailey describes the inflation rate as "welcome news" but warns that inflation is expected to increase again during the second half of the year when the effect of lower energy costs wears off.
The pound weakened by 0.8 percent against the dollar ahead of the Bank of England's announcement. The currency recovered marginally after the cut and was worth 1.28 dollars on Thursday afternoon. British government bonds rose.
