Thu, 18 Dec 2025

Thu, 18 Dec 2025 Bank of England expected to cut interest rates

Analysts believe the Bank rate will fall from 4% to 3.75%, lowering the cost of borrowing.
The Bank of England's Monetary Policy Committee (MPC) is expected to cut interest rates at its meeting, bringing the base rate down to 3.75% from 4%. This would be the sixth consecutive reduction since August last year and the lowest level since February 2023. Economists are predicting a 0.25 percentage point decrease, which could lead to a typical £29 monthly reduction in mortgage repayments for homeowners with tracker mortgages. Those on standard variable rates might see a £14 monthly drop if lenders pass on the rate cut. A lower base rate would also reduce some financial pressure on landlords and may ease rent rises for tenants. However, savers can expect to see returns fall further as a result of any interest rate cuts. The latest inflation data showed a bigger-than-expected drop in Consumer Prices Index (CPI) inflation from 3.6% in October to 3.2% in November. While still above the Bank's target of 2%, this could persuade the MPC to cut interest rates. The four members who voted for a rate cut at the previous meeting were only just outvoted by those who wanted to keep rates on hold. Analysts predict another two cuts next year, but not all agree with this forecast. For savers, the current average easy-access savings account rate is 2.56%, and any interest rate cuts would likely lead to even lower returns. The decision comes as inflation continues to slow, driven partly by falling prices of essentials.
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