The base rate remains unchanged in the Bank’s latest review on 19 June. Find out what was behind the decision and whether there could be any rate cuts later in the year.
The Bank of England has chosen not to reduce the base rate in today’s review. It remains at 4.25%. The rate was reduced from 4.5% to 4.25% in the last review on May 8.
Earlier this year, there was considerable talk about rapid rate cuts. But with higher labour costs and inflation still higher than hoped, the Bank of England has chosen to press pause on any further rate cuts for now. The main rate of inflation decreased slightly to 3.4% in the 12 months to May, which is higher than the Bank’s inflation target of 2%. Financial markets predict that future rate cuts will be ‘gradual and careful’.
That said, we’ve still seen progress in the last year. The base rate was as high as 5.25% in August 2023, and it stood at 5% last August. Last November, it dropped to 4.75% and decreased from 4.5% in February to the current level of 4.25% in May.
Will the base rate come down this year?
Most financial experts agree that further cuts are likely, but probably not yet. Three of the nine members of the Bank of England’s Monetary Policy Commission voted for a rate cut in June’s review but were outvoted. However, this could indicate a higher likelihood of a rate cut in August.
One financial consulting firm has predicted two additional rate cuts this year, bringing the rate down to 3.75% by the end of the year. Longer-term predictions among banks predict the rate will settle somewhere between 2.5% and 4% over the next few years.
Unpredictable situation
However, no one can say for sure exactly what will happen. If you’re wondering how the current economic situation might affect your borrowing plans, or would like to chat through your options, we can offer bespoke advice.
If you’re due to remortgage in the next six months, it’s essential to act now to improve your chances of saving money. We offer a Market Watch service. This means we’ll lock in the best deal for you now, and should rates come down, we’ll resubmit your mortgage application to ensure you achieve the best possible rate. However, if rates increase, you still have the peace of mind that comes with knowing you secured the best rate available. We’re here to help.