Will the Bank of England cut interest rates on 18 June 2026? Latest interest rate predictions explained

Latest interest rates news

• The Bank of England held interest rates at 3.75% on 30 April, in a move that was widely expected. The Monetary Policy Committee voted 8-1 in favour of holding rates, with one member voting to increase rates to 4%.
• In its deliberations and forecast, the MPC sent the message that higher inflation is on the way and higher rates are likely this year.
• Up to six rises could be possible, taking interest rates up to 5.25%, in a worst case scenario, with inflation almost doubling to above 6%, it says.
• If this happens, the repayments on a typical £250,000, 25-year mortgage would increase by nearly £300 a month, from £1,445.50 before the war to £1,727 – an annual increase of £3,380, suggests Moneyfacts. Experts are dubbing the increase in costs ‘Trumpflation’.
• According to Bank of England Governor Andrew Bailey, what happens next with interest rates will “depend on the size and duration of the energy price shock“, adding that he can’t give a “cast iron assurance” there won’t be a rate increase, even if oil prices drop going forward.
• Before the Middle East conflict began, the Bank was widely predicted to make two interest rate cuts in 2026.
• However, interest rate predictions vary – read on for more details. Also, due to the economic turmoil caused by the conflict in the Middle East, predictions on what may happen next are shifting fast.

What interest rate forecasts mean for your mortgage

What markets expect to happen to interest rates has a direct impact on fixed-rate mortgage pricing. Swap rates – which reflect market expectations for future interest rates – are the primary benchmark for pricing fixed-rate mortgages in the UK, although other factors such as competition also play a role.

If swap rates rise because markets expect higher interest rates, lenders typically increase mortgage rates. Conversely, falling swap rates can lead to cheaper fixed-rate mortgage deals. 

Swap rates rose sharply following the outbreak of the Middle East conflict, as predictions of interest rate cuts in 2026 gave way to forecasts of rate increases instead. This led to a rapid increase in fixed mortgage rates. As predictions have eased, swap rates have fallen back, and many lenders have started trimming mortgage rates.

Experts say that while mortgage rates may fall further, given the uncertain outlook, those keen to secure a fixed rate mortgage should consider locking in a rate now, rather than holding off in the hope of further falls. This will protect against the risk of rates climbing further and borrowers can keep the rate under review in case a better deal appears before completing.

What should you do if you have a mortgage?

• On a fixed rate? Your payments won’t change until your deal ends, even if interest rates rise or fall.
• Remortgaging soon? If your current deal ends in the next six months, consider locking in a rate now to protect against the risk of mortgage rates rising further. You can then keep the rate under review.

Get fee-free, mortgage advice from award-winning mortgage brokers L&C. Lock in a rate, then keep under review in case rates fall before you need to switch.

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Economists’ interest rate predictions for 2026

Interest rate predictions are notoriously difficult at the best of times, but the complexity of the current situation in the Middle East makes it even harder. Forecasts for what’s next for interest rates vary considerably.

1. Forecasts that interest rates could rise:

• JP Morgan predicts that interest rates will be increased once this year, in June. 
• National Institute of Economic and Social Research predicts that if the rise in energy costs were to last for a year, interest rates could climb to 4.5%.
• Ben Zaranko, a director at the Institute for Fiscal Studies, said an interest rate rise above 4% could not be ruled out. 

2. Forecasts that interest rates may stay the same

• Oxford Economics believes that the Bank of England will hold interest rates at their current level for the rest of 2026 and “well into 2027”.
• Sylwia Hubar, a UK economist at banking group Natixis, said: “Significant risks persist, particularly from the Middle East conflict. Should this conflict continue, potentially fuelling inflation while adversely affecting economic growth, the Bank of England may ultimately keep the Bank Rate unchanged this year.”
• In Reuters’ poll of economists, 33 expected the base rate to be unchanged in 2026, 14 expected at least one rate hike and 15 predicted one or more cuts.
• Goldman Sachs and Citi predict interest rates will remain unchanged in 2026.
• ING’s James Smith predicts that interest rates will stay unchanged throughout this year.

3. Forecasts that interest rates may go down:

• Former chief economist of the Bank of England Andy Haldane said: “For now, growth in the economy calls for lower interest rates, not higher ones.”

However, what happens with interest rates in 2026 will depend on numerous factors. You can keep up to date by bookmarking our guide to best mortgage rates in the UK or signing up to our weekly newsletter.

Need to remortgage? 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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Why did the Bank of England hold interest rates on 19 March 2026?

• The Bank of England’s decision to hold interest rates on 19 March was widely expected, as the central bank adopted a wait-and-see approach to the Middle East conflict, which sent energy prices soaring and fuelled inflation fears. The Monetary Policy Committee’s decision to hold rates was unanimous.

When did the Bank of England last cut interest rates?

• The Bank of England last cut UK interest rates in December 2025 to their lowest level in almost three years, marking the sixth interest rate cut since rates peaked in 2024, in an attempt to stimulate the economy.

When will UK mortgage rates come down?

Experts previously expected mortgage rates to fall further in 2026. However, the outlook has become more uncertain following the conflict in the Middle East, which has pushed up energy prices and could result in interest rates rising.

This unpredictable outlook comes as little surprise to the UK public. In our 2026 research, we found that around a quarter of Brits expect rates to rise (23%) and a similar proportion think they will fall (25%), while 28% expect them to stay the same and 24% are unsure.

But there are many factors at play, which makes an accurate mortgage rate forecast difficult to make. Read more in our guide on Mortgage rate predictions.

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.

The best mortgage rates are changing fast. For the latest deals and fee-free mortgage advice speak to award-winning mortgage brokers L&C. Start online or give them a call today.

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What’s happening with the UK inflation rate?

• The latest official data, released in April 2026, showed the UK inflation rate (measured by CPI) increased to 3.3% in March, up from 3% in February, after the conflict in the Middle East caused the largest jump in petrol and diesel prices in over three years.
• CPIH, which includes owner‑occupiers’ housing costs, increased to 3.4% from 3.2%, while RPI inflation came in at 4.1%, up from 3.6%.
• The Organisation for Economic Co-operation and Development expects the headline rate of inflation in the UK to rise to 4% this year, the second-highest in the G7 after the United States – highlighting how exposed the UK is to rising energy prices.
• It also believes the UK faces the biggest hit to growth from the conflict among the G20 advanced economies. It now forecasts the UK economy will expand by just 0.7% in 2026 – down from a previous projection of 1.2% – the largest downgrade in its updated outlook, released this morning.

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

The next Bank of England Monetary Policy Committee meeting is on 18 June 2026. Its subsequent meetings are on 30 July 2026 and 17 September. The Bank of England publishes a calendar of future committee meeting dates here.

What does ‘terminal rate’ mean?

The terminal rate for the Bank of England refers to the peak or final level of the Bank Rate in a specific interest rate cycle, reflecting the highest (or lowest, in a cutting cycle) point the central bank brings rates to before holding or reversing.

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 depend on a number of factors including your credit history.

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