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STORY: The Bank of England cut interest rates from a 16-year high on Thursday, but it was a close decision.

Five members of the central bank's governing body voted in favour of the move, believing inflation pressures had eased enough for a cut, while four were against.

They agreed to lower rates by a quarter-point to 5%.

However, central bank Governor Andrew Bailey said they would move cautiously going forward.

He said they needed to make sure inflation stays low, and be careful not to cut interest rates too quickly or by too much.

Rates have been on hold for almost a full year, and Thursday saw the first cut since the start of the pandemic in March 2020.

British consumer price inflation returned to the bank's 2% target in May and stayed there in June.

This leaves British inflation lower than in the euro zone and United States.

The central bank is focused on what it sees as medium-term drivers of inflation.

It includes services prices, wage growth and more general tightness in the labor market.

Services inflation came in well above forecasts in June, but the Bank put this down to "volatile components."

Wage growth, at nearly 6%, is almost double the rate the Bank views as consistent with 2% inflation, but it is slowing in line with expectations.

However, the Bank warned there is a risk inflation pressures might prove more persistent, and keep it above target for longer than its main forecast.