Interest Rates Expected to be Cut by Bank of England

Interest Rates Expected to be Cut by Bank of England

Interest rates are widely expected to be cut on Thursday, with further falls predicted for later in the year. The BBC news service is reporting that analysts suggest that a cut to 4.25% from 4.5% by the Bank of England is highly likely, although no change or a bigger reduction remain possibilities.

Such a move would make borrowing money by businesses and individuals less expensive, but there are likely to be lower returns for savers.

The announcement will come at 12:02 BST, following a two-minute silence to mark VE Day.

If a cut is confirmed, it would be the fourth rate reduction from last year’s peak of 5.25%, and the second this year.

Members of the Bank’s Monetary Policy Committee (MPC) will be paying close attention to the rate of price rises in the UK, as measured by inflation.

Interest rates are the Bank’s primary tool in ensuring the annual rate of inflation remains at, or close to, the target of 2%.

The latest data shows an inflation rate of 2.6% in the 12 months to March, although a series of bill increases at the start of April – including domestic energy prices – mean the rate is expected to climb, perhaps only temporarily.

The committee will also be alert to wider global economic uncertainty. President Trump’s tariff policy in the US was unveiled after the MPC’s last meeting in March.

Many analysts say inconsistency and uncertainty regarding the policy may push down growth and inflation, leading to expectations of the MPC responding with more interest rate cuts this year.