The Bank of England's decision to cut its benchmark interest rate for a second time came as a surprise to many, but the central bank has been paving the way for the move for several months now.

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 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.