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The UK’s base interest rate is expected to fall to its lowest point in more than 18 months, providing a welcome boost for mortgage holders.
Analysts believe senior economists at the Bank of England will cut the interest rate from 4.75 per cent to 4.5 per cent in its monthly announcement on Thursday morning.
The base rate helps dictate the cost of borrowing such as taking out mortgage with some products, known as tracker mortgages, following it.
The figure also impacts rates paid by individuals and businesses to take out loans.
But after the rate rose as high as 5.25 per cent in late 2023, there is an indication it will continue to fall, especially after inflation unexpectedly fell to 2.5 per cent in December.
Interest rates are typically raised when inflation is high to discourage people from spending money, thereby slowing the rate of price rises.
However, with economic growth stagnating across the UK, many believe the Bank will make another interest rate cut to encourage more spending and stimulate the economy.
Could rates go up?
Some recent announcements have indicated that inflation could be on the way back up, albeit more gradually, posing a potential problem for the Bank.
On Wednesday, a survey of companies in the service sector, which includes everything from shops and pubs to finance firms and lawyers, found that cost inflation in the industry nudged up in January.
Most economists think these signs of rising inflation are unlikely to put policymakers off cutting rates on Thursday, but it could lead them to be more cautious at future meetings in March and May.
Athena Stavrou5 February 2025 19:03
Full story: UK interest rates set to fall at Bank of England meeting on Thursday
The cost of borrowing is expected to fall to its lowest point in more than 18 months on Thursday.
Senior economists at the Bank of England will announce whether they are cutting the UK’s base interest rate, which currently sits at 4.75%.
Most experts predict a quarter point reduction to 4.5%, continuing a series of cuts which started last summer.
The base rate helps dictate how expensive it is to take out a mortgage or a loan, while it also influences the interest rates offered by banks on savings accounts.
Read the full story here:
Athena Stavrou5 February 2025 18:00
Interest rates expected to fall
The UK’s base interest rate is expected to fall to its lowest point in more than 18 months, providing a welcome boost for mortgage holders.
Analysts believe senior economists at the Bank of England will cut the interest rate from 4.75 per cent to 4.5 per cent in its monthly announcement on Thursday morning.
The base rate helps dictate the cost of borrowing such as taking out mortgage with some products, known as tracker mortgages, following it.
The figure also impacts rates paid by individuals and businesses to take out loans.
Athena Stavrou5 February 2025 16:34
