Wed, 06 Aug 2025

Wed, 06 Aug 2025 Bank of England expected to cut interest rates

Borrowing costs are forecast to fall to 4%, the lowest since early 2023, despite higher inflation.

* The UK interest rate is expected to be cut on Thursday, reaching its lowest level since March 2023.
* The Bank of England will likely reduce interest rates from 4.25% to 4%, marking its fifth cut since last August.
* A lower base rate can lead to reduced mortgage costs for some homeowners but may also mean smaller returns for savers.
* Next week, the Office for National Statistics will release data on the UK economy's performance between April and June.
* If interest rates are trimmed, repayments on an average standard variable rate mortgage of £250,000 over 25 years would fall by £40 per month.
* However, the average return rate for savers would fall from 3.9% to 3.5%.
* Savings rates are getting worse and further base rate reductions will be "misery" for savers, according to Rachel Springall, finance expert at Moneyfacts.
* Despite inflation rising above the Bank of England's target, there are signs that the UK employment market is cooling, which could weigh on inflation.
* The number of people on payrolls is falling, vacancies are lower, and the jobless rate has ticked higher.
* Annual growth in average regular earnings slowed to 5% between March and May.
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