{"id":352505,"date":"2025-12-18T04:06:10","date_gmt":"2025-12-18T04:06:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/352505\/"},"modified":"2025-12-18T04:06:10","modified_gmt":"2025-12-18T04:06:10","slug":"bank-of-england-expected-to-cut-interest-rates-2","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/352505\/","title":{"rendered":"Bank of England expected to cut interest rates"},"content":{"rendered":"

Kevin PeacheyCost of living correspondent<\/p>\n

\"GettyGetty Images<\/p>\n

Policymakers at the Bank of England are expected to cut interest rates – bringing the Bank rate down to its lowest level since February 2023.<\/p>\n

Analysts are widely predicting a fall from 4% to 3.75%, although they do not expect a unanimous decision among the nine-member Monetary Policy Committee (MPC).<\/p>\n

This would be the sixth cut in interest rates from August last year.<\/p>\n

The Bank rate heavily influences the cost of borrowing by consumers, but also the returns given to savers.<\/p>\n

The MPC has a target to keep inflation – which charts the rising cost of living – to 2%. The Bank rate is the committee’s primary tool for achieving its ambition.<\/p>\n

The latest inflation data<\/a>, published on Wednesday, showed a bigger drop to Consumer Prices Index (CPI) inflation than analysts had been expecting.<\/p>\n

The rate of CPI fell to 3.2% in November, from 3.6% in October, the Office for National Statistics (ONS) said.<\/p>\n

\"A<\/p>\n

While inflation remains above the Bank’s target, the latest fall in the rate and signs of rising unemployment and a relatively stagnant economy are likely to push the committee towards an interest rate cut.<\/p>\n

At the previous meeting in November, the four members of the MPC who voted for a cut were only just outvoted by the five who wanted to keep rates on hold.<\/p>\n

At the time, the Bank’s governor, Andrew Bailey, said he would “prefer to wait and see” whether inflation continued to drop back.<\/p>\n

James Smith, developed market economist for ING, said the sharp drop in the November rate of inflation “green lights” a rate cut.<\/p>\n

He said the “latest drop in inflation fits into a broader body of evidence suggesting that price pressures are cooling”.<\/p>\n

He is forecasting another two cuts to interest rates in February and April next year, although not all analysts agree with this suggestion.<\/p>\n

Impact on borrowing and savings<\/p>\n

About 500,000 homeowners have a mortgage that “tracks” the Bank of England’s rate. If a 0.25 percentage point cut does come, it is likely to mean a typical reduction of \u00a329 in their monthly repayments.<\/p>\n

For the additional 500,000 homeowners on standard variable rates, there would typically be a \u00a314 a month fall, assuming there is a cut in the Bank rate and lenders pass on the cut to their customers.<\/p>\n

The vast majority of mortgage customers have fixed-rate deals. Rates on these deals have been falling recently, owing to the expectation among lenders of a Bank rate cut in December.<\/p>\n

As of 17 December, the average two-year fixed residential mortgage rate was 4.82%, according to financial information company Moneyfacts. A five-year rate was 4.90%.<\/p>\n

Mortgage rate cuts should also reduce some financial pressure on landlords, and perhaps ease the likelihood of rent rises for tenants.<\/p>\n

However, savers are likely to see a further fall in returns as a result of any Bank rate falls. <\/p>\n

The current average rate on an easy-access savings account is 2.56%, according to Moneyfacts.<\/p>\n","protected":false},"excerpt":{"rendered":"Kevin PeacheyCost of living correspondent Getty Images Policymakers at the Bank of England are expected to cut interest…\n","protected":false},"author":2,"featured_media":352506,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46],"class_list":{"0":"post-352505","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-ca","10":"tag-canada","11":"tag-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/352505","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=352505"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/352505\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/352506"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=352505"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=352505"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=352505"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}