Why has the Bank of England cut interest rates?

The bigger question is why this series of cuts – five over the past year – has not boosted the economy more dramatically.

The Bank expects second quarter GDP growth, which will be published by the Office for National Statistics next week, to be just 0.1%.

However, thereafter it does predict that in the third quarter, economic growth will pick up to 0.3%, partly on the back of the prime minister’s trade deal with the US boosting what had been flagging exports.

Obviously, the global backdrop has weighed down on the economy.

The Bank points to the 24% drop in UK car exports to the US in May. That should now reverse.

The notable economic factor has been the very high rate of savings in the economy, remaining at pandemic double digit levels as a proportion of the economy.

Essentially, although pay has been rising faster than inflation, consumers have not felt confident enough to increase spending. This is partly an expected result of what were high interest rates.

But the general negative vibe, not helped by what was a rather downbeat drumbeat from government last year, does appear to have held consumers back.

If spending reverts to normal, and savings rates decline, then the Bank predicts a notable improvement in economic growth, eventually.

But the lingering suspicion that inflation has not quite been defeated, which will be seen in upcoming food prices, remains.

And the Bank clearly is picking up the impact of some government policies, from the rise in National Insurance for employers, and the national living wage.