📉 Bank of England Cuts Interest Rates – What It Means for Mortgages and the Broader Economy
Today the Bank of England has reduced its base interest rate from 4.00% to 3.75%, marking the lowest level in almost three years and the latest in a series of rate cuts through 2025. This move comes as inflation continues to ease — with the Consumer Prices Index falling more than expected — and reflects growing concerns about slowing economic activity.
🔑 Key points from the decision:
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The Monetary Policy Committee voted narrowly (5-4) in favour of the cut, with Governor Andrew Bailey tipping the balance towards easing. AP News
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Inflation has fallen to around 3.2%, putting it closer to the Bank’s 2% target and easing pressure for tighter monetary policy. AP News
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However, inflation is still above target, and some policymakers remain cautious about how far rates should fall. The Guardian
đź“Ł What this means for homeowners and borrowers:
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Mortgage holders, especially those on variable or tracker deals, should see borrowing costs start to fall as lenders pass on lower base rates — a welcome relief after a long period of elevated rates. MoneySavingExpert.com
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Fixed-rate borrowers won’t feel a direct change until their deals are up for renewal, but future products could start to look more competitive as the market adjusts. MoneySavingExpert.com
đź’ˇ For savers and investors:
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Lower base rates typically mean lower returns on savings accounts and certain cash products, so it’s worth reviewing your savings strategy. MoneySavingExpert.com
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Some analysts currently anticipate additional rate cuts through 2026 as inflation continues its downward trajectory, though the path isn’t guaranteed. MoneySavingExpert.com
🏡 Broader economic context:
The rate cut aims not just to ease mortgage pressure but also to support broader economic growth, which has shown signs of stalling, with weak GDP and rising unemployment cited by policymakers.
Read the full article from Sky : https://news.sky.com/story/money-latest-interest-rate-mortgages-inflation-personal-finance-consumer-news-13040934
