The Bank of England (BoE) has announced a 0.25% cut to interest rates to bring the central bank’s base rate down to 4.25%.

The latest move is the fourth cut to the base rate since the BoE started to bring interest rates down last August from a recent peak of 5.25%.

At its meeting this week, the BoE’s Monetary Policy Committee (MPC) voted by a majority of five to four in favour of a 0.25% reduction. Two members had voted for a larger cut of 0.5%, while the other two members were in favour of holding rates at 4.5%.

In the MPC’s report published, it stated that “monetary policy is not on a pre-set path”, and said the Committee would remain “sensitive to heightened unpredictability” in the economic environment.

While the annual CPI inflation rate fell from 2.8% in February to 2.6% in March, the MPC warned that increases in energy prices are still likely to drive up CPI inflation from April onwards, to 3.5% during Q3, before coming down again later in the year.

Savings managing director at Paragon Bank, Derek Sprawling, described the reduction in the base rate as a “wake-up call for savers to do more with their money”.

“There is over £520bn earning zero or little interest in current and savings accounts and the value of that cash is being eroded every day by not keeping pace with inflation,” Sprawling commented.

“The base rate cut is likely to put further downward pressure on savings rates and, with the average interest rate offered on pure easy access savings accounts by the big five high street banks standing at less than 1.25%, people can and should be generating better returns through switching.”

CEO of Just Mortgages and Spicerhaart, John Phillips, added: “Movement on the base rate is absolutely welcomed and will certainly help to stimulate demand. Given the certainty around today’s news, we’ve already seen swaps respond positively and lenders reprice, with the competition for market share likely only to increase with future moves.