The central bank said future cuts would be gradual amid higher inflation forecasts after the new government introduced spending and tax increases in its budget.

The Bank of England has cut its main interest rate by a quarter of a percentage point after inflation across the U.K. fell below its target rate of 2%.

The Bank of England on Thursday said it was cutting its key interest further after UK inflation hit a three-year low and signalled more reductions, easing pressure on borrowers.