Will the Bank of England cut interest rates on 18 September?

The Bank of England cut interest rates from 4.25% to 4% on 7 August, the fifth interest rates cut in a year.

The decision was narrowly passed by a 5–4 split vote, with one member initially pushing for a larger 0.5 percentage‑point reduction.

But despite August’s cut, a further cut this month is highly unlikely. The Bank of England has a difficult balance to strike as it needs to support growth but also bring inflation under control. Inflation figures are edging higher than expected but at the same time the economy is slowing.

Andrew Bailey, the Bank’s governor, has poured cold water on how soon any further cuts may happen.

Giving evidence to parliament’s Treasury Select Committee as part of the Bank’s annual report to MPs, said:  “Although we’ve taken a further step, and although I think that the path will continue to be downwards, gradually over time, because policy is still restrictive…. there is now considerably more doubt about exactly when and how quickly we can make those further steps. 

“That’s, that’s the message I wanted to get across. Now I think actually, judging by what’s happening to market pricing, I think that message has landed.” 

Markets no longer expect another rate cut this year, with the next cut only fully priced in by next April. 

Inflation figures released in August showed Consumer Price Inflation calculated by the ONS reported inflation rose to 3.8% in July 2025, up from 3.6% in June and the highest level since January 2024. CPIH, which includes housing costs, also climbed to 4.2%, while RPI reached 4.8%. Food prices were a major driver, with food inflation hitting 4.2% in August – the steepest increase in 18 months.

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Will the Bank of England cut interest rates on 18 September?

No, the Bank of England is not predicted to cut interest rates from 4% when its Monetary Policy Committee next meets on 18 September.

Interest rates predictions

• Ahead of the Bank of England’s Monetary Policy Committee‘s widely-predicted August cut, most analysts expected a further interest rates cut in November, to bring the base rate down to 3.75%. However, opinions have changed since.
• Looking at the latest money market pricing, another rate cut is only fully priced in by next April, whereas it was previously expected by December. 
• Also, following the interest rates cut announcement, the pound jumped, suggesting traders believe it may take the Bank longer to cut interest rates again.
• But opinions are divided. Luke Bartholomew, deputy chief economist at Aberdeen, told the Guardian: “It will be difficult for the Bank to give clear guidance about the likely path of rates from here given the messy data and divided MPC. But in the end, we expect the weakness of growth to win out, and for the Bank to cut rates again later this year, and then through next year as well.”

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Latest Bank of England base rate news

The Bank of England cut interest rates in August from 4.25% to 4%. This decision was widely expected.

The move follows cuts in May 2025, February 2025, November 2024 and August 2024, when the base rate was first cut from 5.25%.

What are interest rates and why do they change?

• 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 is 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.
• However, the Bank’s Monetary Policy Committee will assess a range of factors when deciding whether to cut interest rates including job and wages data and external factors that can impact the economy.

What’s happening with inflation?

Official figures released in July 2025 showed that the UK inflation rate had unexpectedly increased to 3.6% in the 12 months to June, up from 3.4% the previous month. This is 1.6 percentage points higher than the Bank’s inflation target of 2%.

Official government figures released in August 2025 show that CPI inflation rose to 3.8% in the 12 months to July 2025, up from 3.6% in June and the highest level since January 2024.

CPIH, which includes owner‑occupiers’ housing costs, increased to 4.2%, while RPI inflation came in at 4.8%, underscoring persistent pressures across housing and consumer prices.

A sharp rise in food inflation has intensified cost-of-living pressures for households. According to the British Retail Consortium, food inflation climbed to 4.2% in August 2025, the steepest increase in 18 months driven by surging prices for staples such as butter, chocolate and eggs.

All of this leaves inflation running at almost double the Bank of England’s 2% target, and suggests it may take much longer for price rises to return to more stable levels. That makes further interest rate cuts much less likely in the short term, with markets now expecting the Bank to hold at 4% for several months and only ease gradually once inflation shows clearer signs of falling back towards target.

When is the Bank of England’s Monetary Policy Committee’s next meeting?

The next Bank of England’s Monetary Policy Committee meeting is on 18 September 2025. Its subsequent meetings are on 6 November 2025 and 18 December 2025. The Bank of England publishes a calendar of future committee meeting dates here.

How do interest rates affect mortgages, loans and savings rates

How changes in interest rates affect your mortgage

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:

1. You’re taking out a new mortgage: If you’re shopping around for a new mortgage or want to remortgage, the mortgage rates available should improve if interest rates fall, although this isn’t guaranteed.
2. If you’re on a fixed rate mortgage the amount you’ll pay on your monthly mortgage payments will stay the same during your initial term – usually 2 or 5 years. So your mortgage payments won’t change if interest rates go up or down.
3. You have a tracker mortgages If you’re one of the estimated 600,000 households on a tracker mortgage deal and interest rates are cut, your mortgage payments will fall as the rate you pay on your mortgage rises and falls in line with the Bank of England base rate.
4. If you’re on a discounted variable rate you’ll pay a rate that’s lower than the lender’s Standard Variable Rate. If your lender decides to pass on the cut in interest rates, your mortgage payments will fall. But it won’t necessarily pass on all or any of the cut.
5. You’re on your lender’s Standard variable rate (SVR) According to UK Finance, there are around 1.1 million households on their lender’s standard variable rate. If this includes you, if your lender decides to reduce its SVR if interest rates fall, the amount you’ll pay will fall. But the lender may not pass on all or any of an interest rate cut. Lenders’ SVRs can be extremely expensive, so check your deal now to see if you can save by remortgaging.

Need to remortgage? Don’t sit around waiting for rates to improve. Our mortgage partners at L&C can find and lock-in the best rate now and keep it under review – for free.

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Interest rate changes impact on credit cards and loans

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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