The Bank of England’s Monetary Policy Committee announced yesterday that the interest rate of 4.75% will be maintained. Truth be told, this isn’t an announcement likely to send shockwaves through the economy. Analysts and market experts largely anticipated that this would be the MPC’s decision.
With many lenders also sharing these predictions and budgeting accordingly, we’re expecting to see mortgage and bank interest rates to behave similarly to last month.
This decision has most likely been fuelled by the inflation rate remaining higher than BoE’s 2% target.
However, while rates haven’t moved this month, it does beg the question: ‘When might we see the base rate change again?’ According to Bank of England Governor Andrew Bailey, 2025 could see it cut four times – each time by a quarter point. Where they’re likely to actually end up is a matter of opinion and speculation, and predictions have subsequently varied between forecasters. While some such as Goldman Sachs bullishly predicted a low of 2.75% at the end of 2025, others including Santander can only foresee them falling to 3.75%.
It’s worth bearing in mind however that cutting rates next year is a goal, not a promise. Just as things often get in the way of the New Year’s resolutions we so staunchly believe we will keep, metrics such as inflation as well as other political, economic and social factors may ultimately force BoE’s hand.
As ever, if you need any assistance in navigating this announcement, please don’t hesitate to get in touch.
