The Bank of England is expected to cut interest rates today in what will be welcome boost for millions of households. The base rate is currently set at 4.5% and most economists anticipate it will be cut to 4.25%.
In the lead up to this decision, President Trump unleashed a barrage of trade tariffs, which caused chaos across global economics.
Bank of England Governor Andrew Bailey has signalled to policymakers that they should anticipate tariffs to hit UK economic activity, and this impact is one of the key factors in today’s decision.
Financial markets are almost certain that the UK’s Central Bank will announce a 25 percentage point reduction, taking the base rate to 4.25%. However, some anticipate that one or two members of the MPC may vote for a more substantial 50 percentage point reduction. As it stands, markets have priced in three potential cuts to be made in 2025, up from two.
The base rate dictates how much interest you pay when you borrow money, so mortgages and credit card rates usually get more expensive when it goes up. However, savers are considered the winners when the base rate rises as you are paid more money on your savings pots.
Today’s decision will be announced two minutes later than usual at 12.02pm. The slight move from the normal 12pm is to allow for the VE Day national two-minute silence to be observed.