Thu, 06 Feb 2025

Thu, 06 Feb 2025 Bank of England expected to cut interest rates

A cut to interest rates could mean lower mortgage rates.

* The Bank of England is expected to cut interest rates from 4.75% to 4.5%, with analysts predicting this move will boost the UK economy, which has been experiencing slow growth.
* The decision comes as the inflation rate fell to 2.5% in the year to December, but remains above the Bank's target of 2%.
* Economic uncertainty has increased due to US President Donald Trump's introduction of import tariffs, which could lead to global inflationary pressures and impact price rises in the UK.
* The Bank of England uses interest rates as a tool to control inflation, by raising or lowering borrowing costs to influence demand for goods and slow or speed up price rises.
* A 0.25 percentage point cut in interest rates is expected to benefit around 629,000 mortgage-holders with tracker deals, who could see their monthly repayment fall by £29.
* However, savers may be hit as the return they receive from banks would likely be reduced.
* The Bank of England has hinted at a "gradual approach" to future interest rate cuts, but has not committed to when or by how much it will cut rates in the coming year.
* The decision on interest rates is closely watched, and economists predict that cutting UK interest rates would strike a balance between supporting an economy in slow growth and preventing inflation from rising again.
  >>