{"id":232759,"date":"2025-02-06T01:13:09","date_gmt":"2025-02-06T01:13:09","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/02\/06\/bank-of-england-expected-to-cut-interest-rates-2\/"},"modified":"2025-02-06T01:13:09","modified_gmt":"2025-02-06T01:13:09","slug":"bank-of-england-expected-to-cut-interest-rates-2","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2025\/02\/06\/bank-of-england-expected-to-cut-interest-rates-2\/","title":{"rendered":"Bank of England expected to cut interest rates"},"content":{"rendered":"
\"Bank<\/div>


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Faarea Masud<\/span><\/p>\n

BBC Business reporter<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

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\"GettyGetty Images<\/span><\/div>\n<\/div>\n<\/figure>\n
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Interest rates are expected to be cut by the Bank of England later, in a move closely watched by households and economists.<\/p>\n

Analysts predict the benchmark rate will be cut from 4.75% to 4.5%, as the Bank comes under pressures to boost the UK economy which has been showing slow growth.<\/a><\/p>\n

The Bank rate is the primary tool aimed at controlling inflation, and hopes of a cut rose after the inflation rate – which charts the rising cost of living – fell to 2.5% in the year to December. <\/p>\n

However, it remains above the Bank’s target of 2%, and changes in the Budget are forecast to push it up.<\/p>\n<\/div>\n

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Economic uncertainty has been heightened, owing to US President Donald Trump’s introduction, or threat, of import tariffs. They could lead to inflationary pressure globally, causing a knock-on effect on price rises in the UK.<\/p>\n<\/div>\n

Why do interest rates change?<\/h2>\n<\/p>\n
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The Bank moves rates up and down to try to control inflation, which measures the pace of overall price rises.<\/p>\n

By raising rates, borrowing is made more expensive, so people have less money to spend. People may also be encouraged to save more.<\/p>\n

In turn, this reduces demand for goods and slows the rate at which prices are rising.<\/p>\n

But it is a balancing act – increasing borrowing costs risks harming the economy as it discourages businesses from investing and creating more jobs.<\/p>\n

Once price rises are more under control, then the Bank will consider lowering interest rates.<\/p>\n

Its base interest rate heavily influences the rates High Street banks and other money lenders charge customers for loans, credit cards and other finance deals.<\/p>\n

This is most obviously seen in the cost of mortgages. Reducing the base rate would see an immediate impact for those on “tracker” mortgages.<\/p>\n

About 629,000 mortgage-holders have tracker deals. Typically, their monthly repayment would fall by about \u00a329 as a result of the expected 0.25 percentage point cut later.<\/p>\n

A similar number of householders have variable rate deals, and lenders will be under pressure to cut their rates if the Bank reduces the base rate.<\/p>\n

Fixed rate deals do not change immediately, but the expectation of further rate cuts could lead to new, or renewing, borrowers getting a better deal.<\/p>\n

Savers would be hit by a base rate fall, as the return they receive from banks would also be likely to be cut.<\/p>\n<\/div>\n

‘Gradual approach’<\/h2>\n<\/p>\n
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In December, when rates were held at 4.75%, the Bank’s Governor, Andrew Bailey, said it would take a “gradual approach to future interest rate cuts”.<\/p>\n

But he added: “We can’t commit to when or by how much we will cut rates in the coming year.”<\/p>\n

In the minutes from that meeting, the Bank said there was uncertainty “around how the measures that had been announced in the autumn Budget were affecting growth”. <\/p>\n

Following November’s meeting, Mr Bailey would not be drawn on the impact of Trump tariffs on the UK economy, saying “let’s wait and see”.<\/p>\n

In the US, the central bank – the Federal Reserve – has indicated it will cut rates at a slower pace this year.<\/p>\n<\/div>\n

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When the Bank announces its interest rates decision at 12:00 it will also share a report on where it sees inflation going in the coming months and could hint at its strategy in response.<\/p>\n

Cutting the UK interest rate would strike a balance between “supporting an economy that appears to have ground to a complete halt and preventing inflation from taking off again”, economist Paul Dales from Capital Economics told the BBC.<\/p>\n

“Trump’s tariffs are unlikely to influence UK interest rates much,” he added, but wage growth being faster than the Bank’s forecast could influence its decision.<\/p>\n

The UK economy grew by less than expected in November<\/a>, after not growing at all in the previous two months. A further slowdown is expected as businesses brace for rising costs from April because of budgetary changes like rising National Insurance contributions and higher minimum wages.<\/p>\n

The economic figures came after recent turbulence in financial markets sent the government’s borrowing costs to the highest level for several years and the value of the pound down.<\/p>\n<\/div>\n<\/div>\n


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Faarea Masud BBC Business reporter Getty Images Interest rates are expected to be cut by the Bank of England later, in a move closely watched by households and economists. Analysts predict the benchmark rate will be cut from 4.75% to 4.5%, as the Bank comes under pressures to boost the UK economy which has been […]<\/p>\n","protected":false},"author":2,"featured_media":232760,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/www.bbc.com\/bbcx\/grey-placeholder.png","fifu_image_alt":"","footnotes":""},"categories":[604],"tags":[673,3177,1200,1504,1120,6829],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/232759"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=232759"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/232759\/revisions"}],"predecessor-version":[{"id":232761,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/232759\/revisions\/232761"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/232760"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=232759"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=232759"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=232759"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}