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Post updated: May 9th, 2025
The Bank of England’s decision to cut interest rates on 8 May was considered a sure bet by most experts, with financial markets pricing in an almost 100% chance of interest rates being cut from 4.5% to 4.25%.
But what’s predicted to happen when the bank’s Monetary Policy Committee’s next meets in June?
While there’s a consensus that interest rates are expected to be cut further this year, there’s differing opinion on when this will happen and how far rates will go, amid growing concerns about the UK jobs market and growth due to the turmoil caused by Donald Trump’s trade tariffs:
The Bank of England cut interest rates in May from 4.5% to 4.25%. This followed interest rates cuts in February 2025, November 2024 and August 2024, when the base rate was first cut from 5.25%.
The Bank of England’s base rate acts as a benchmark for the cost of borrowing money. As a general rule, when interest rates increase, so does the cost of borrowing on mortgages and other types of borrowing.
One major reason why the Bank moves rates up and down to help control inflation. When inflation is high, the bank may increase interest rates to try to bring it down by encouraging people to spend less and reduce demand. And once inflation is at or near its target, the Bank may hold or cut interest rates.
Official figures released in April 2025 showed that the UK inflation rate fell by more than expected to 2.6% in the 12 months to March. It’s expected that inflation will increase to 3.7% this summer, amid an increase in the price of food and energy. This would be almost double the Bank’s inflation target of 2%. However, experts say the high level of interest rates coupled with concerns of the hit to the economy as a result of Trump’s trade policies warranted more action to reduce borrowing costs.
The next Bank of England’s Monetary Policy Committee meeting is on 19 June 2025. Its subsequent meetings are on 7 August 2025 and 18 September 2025. The Bank of England publishes a calendar of future committee meeting dates here.
Falling interest rates usually means mortgage rates fall too. Stay up to date with our guide to Mortgage rate predictions.
However, how changes in interest rates affect your mortgage depend on your circumstances:
Other types of borrowing are affected in a similar way. If interest rates go up, borrowing of any type generally gets more expensive, while when interest rates are cut, borrowing generally gets cheaper. However, this is in general terms as the amount you’ll pay on things like credit cards and loans will depends on a number of factors including your credit history.
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