{"id":169687,"date":"2024-11-07T03:33:21","date_gmt":"2024-11-07T03:33:21","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/11\/07\/bank-of-england-expected-to-cut-interest-rates\/"},"modified":"2024-11-07T03:33:21","modified_gmt":"2024-11-07T03:33:21","slug":"bank-of-england-expected-to-cut-interest-rates","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/11\/07\/bank-of-england-expected-to-cut-interest-rates\/","title":{"rendered":"Bank of England expected to cut interest rates"},"content":{"rendered":"
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Interest rates are widely expected to be cut by the Bank of England on Thursday, in a move closely watched by businesses and consumers.<\/p>\n

Most analysts predict that the benchmark rate will fall from its current level of 5% to 4.75% when the decision is announced at 12:00 GMT.<\/p>\n

That would make borrowing money cheaper, but is likely to reduce the returns available to savers.<\/p>\n

The Bank’s Monetary Policy Committee (MPC) meets eight times a year to set rates.<\/p>\n<\/div>\n

Bank of England expectation<\/h2>\n<\/p>\n
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The Bank of England cut interest rates from 5.25% to 5% in August, which was the first drop in more than four years following a string of increases.<\/p>\n

Since then, official figures have revealed that the UK inflation rate – which charts the rising cost of living – dropped unexpectedly<\/a> to 1.7% in September.<\/p>\n

That was the lowest rate for three-and-a-half years and below the 2% target set by the government. Interest rates are the main tool for the Bank to control the level of inflation.<\/p>\n<\/div>\n

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Subsequent figures from the Office for National Statistics (ONS) showed that wage growth<\/a> slowed to its lowest pace for more than two years.<\/p>\n

That gave more impetus to the likelihood of a Bank rate cut. <\/p>\n

Bank Governor Andrew Bailey also told the Guardian<\/a> last month that it could be a \u201cbit more aggressive\u201d at cutting borrowing costs, depending on the rate of inflation.<\/p>\n<\/div>\n

How it affects borrowers and savers<\/h2>\n<\/p>\n
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The Bank’s base interest rate heavily influences the rates High Street banks and other money lenders charge customers for loans, as well as credit cards.<\/p>\n

Lenders have mostly “priced in” the impact of a base rate cut when making decisions on their own interest rates.<\/p>\n

Mortgage rates are still much higher than they have been for much of the past decade. The average two-year fixed mortgage rate is 5.4%, according to financial information company Moneyfacts. A five-year deal has an average rate of 5.11%.<\/p>\n

However, more than one million borrowers on tracker and variable deals could see an immediate fall in their monthly repayments if the Bank cuts rates.<\/p>\n

Savers would likely see a reduction in the returns offered by banks and building societies. The current average rate for an easy access account is about 3% a year.<\/p>\n

Rachel Springall, of Moneyfacts, said: “Savers are the ones who feel the force of cuts to interest rates. Those savers who use their interest to supplement their income will feel overlooked if rates plummet.”<\/p>\n<\/div>\n

Budget and US election impact<\/h2>\n<\/p>\n
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Political events will feed into the Bank’s decision on Thursday, specifically last week’s Budget delivered by Chancellor Rachel Reeves, and Donald Trump’s sweep to victory.<\/p>\n

The government’s official, but independent, forecaster – the Office for Budget Responsibility – said, in the short term, measures announced in the Budget would push inflation and interest rates higher than they would otherwise have been.<\/p>\n

This has created more doubt about whether the Bank of England will cut interest rates again following its meeting in December.<\/p>\n

Meanwhile, analysts’ forecasts suggest US inflation will be higher under the expectation that Trump will introduce higher tariffs on all imports next year.<\/p>\n

This would give the Federal Reserve less scope to ease interest rates, and could affect decisions made around the world, they said.<\/p>\n<\/div>\n

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What are my savings options?<\/h2>\n<\/p>\n
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