The Bank of England has announced a cut in UK interest rates by a quarter of a percentage point to 5.25% from 5.5%.

The cut means that the cost of borrowing will fall, however many economists fear that this saving could be neutralised by rising inflation.

The Bank of England’s Monetary Policy Committee voted 8-1 in favour of keeping interest rates on hold in January. However, since then, global markets have fallen as well as two interest rate cuts in the US.