Thu, 05 Feb 2026

Thu, 05 Feb 2026 Bank hints at rate cuts, but don't expect Covid-era mortgage deals

The Bank of England may have suggested more rate cuts are on the way, but they are unlikely to go much lower.
The Bank of England has decided not to change interest rates for now, but it's likely that they will be cut again soon. This means that some people who borrow money may see their payments go up if they need to remortgage or switch deals. However, savers may breathe a sigh of relief as high inflation is easing and interest rates are unlikely to drop too low. The Bank thinks that the UK's economy will grow slowly this year and unemployment will rise to 5.3%. To combat inflation, which is currently above its target rate of 2%, the Bank will probably cut interest rates again. But it won't go back to the very low levels seen during the pandemic because those were an exception. Economists think there may be one or two more interest rate cuts this year, but not as many as in previous years. As a result, the base rate is unlikely to fall below 3-3.5%. This is higher than some people might expect, given that rates have been low for a while. The Bank's governor says that interest rates should come down a bit more, but won't go back to their pandemic-era lows. For borrowers, this means that they may face higher payments if they need to switch deals or remortgage soon. For savers, it's good news as high inflation is easing and interest rates are unlikely to drop too low.
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