Interest rates live: Rate cut expected by Bank of England despite inflation and Trump tariffs

Here’s how the next hour or so will pan out:

At noon we’ll get the decision, we’ll get plenty of expert comment and the interest rate change (assuming predictions are right) will take effect.

Then at 12:30 we get a press conference at the BoE where the voting members will explain upcoming economic expectations and more.

No doubt a lot of political reaction and public expectation to follow this afternoon too.

Here’s a more graphic representation of just how high interest rates rose as inflation spiralled under the last government – and how rates are still only slowly coming back down under this one.

For over a decade, borrowing money was super cheap, very nearly free.

Anyone with repayments to make between 2020 and 2023 got a bit of a shock to the system if their deal was tracking the base rate, that’s for sure.

But we are, as the right side of the chart shows, on a steady path downwards in the past year or so. “Gradual and careful,” the BoE calls it.

Plenty say that even this is too fast though, with inflation having been rising once more of late.

The UK has a new cheapest supermarket, if you’ve not already heard – Aldi lost the title for the first time in two years.

You can read more about that here including how loyalty cards impact (or don’t!), and you can vote in our poll below to tell us where you shop too!

Aside from being a negative for savers, most households will generally see an interest rate cut as a positive.

However, the savings it makes them on bills and borrowing may not feed through to spending immediately, says one expert – because of fears about what lies ahead.

That’s particularly prevalent given talk of more taxes in the Budget this autumn.

“Investors are primed for an interest rate cut from the Bank of England later today, given the highly sluggish nature of the economy, and the rising unemployment rate,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“There will be hopes that if loans become cheaper, it will help boost consumer and business confidence but there’s a long way to go. In the meantime, speculation over potential tax rises in the Autumn Budget may keep households and companies cautious, given the uncertainty over where extra burdens may land.

“There will be a lot of focus on the voting split on the Monetary Policy Committee, given that the views are highly unlikely to be unanimous, and the leaning of members could help indicate the speed of future rate cuts.”

If you’re on a tracker mortgage rate (or if you’re soon to negotiate down a deal from a couple of years ago) then an interest rate cut today could be to your benefit, saving a bit of outgoing money.

However, if you still put that into paying off your property (if your terms allow – always check!) then it can save you way more in the long run.

Jinesh Vohra, CEO of mortgage app Sprive, said: “Around one in five (17 per cent) mortgage holders are currently on variable rate mortgages, and if the Bank of England cuts the base rate today, their mortgage rate will drop as a result.

“For example, someone with a £150,000 mortgage at 4.25% over 25 years currently pays around £812 a month.

If the rate is cut by 0.25%, their monthly payment would fall to £791 — a saving of £21 a month, or £252 a year.

“While it might be tempting to enjoy that saving, those who can afford to should consider maintaining their current payment level and using the £21 saving to overpay their mortgage instead. Doing so could save them £4,280 in interest and help clear their mortgage 1 year and 1 month earlier.

“Overpaying is one of the most powerful ways to become mortgage-free faster. Even small, regular overpayments can knock years off the term and save thousands in interest — helping mortgage holders reach financial freedom sooner, without stretching their budget.”

Here’s a quick wrap of the latest companies announcements and financials this morning:

Advertising firm WPP has cut 7,000 jobs and saw profits drop from £338m a year ago to £98m this year as a tough year continues. Shares were down 2.7 per cent this morning and have dropped by more than half this year.

Aside from the questions of inflation and economic growth, there’s one additional big reason why lots of people hope for interest rate cuts, now and in the coming months.

Many thousands of homeowners are set to see their five-year fixed term mortgage deals expire in the second half of 2025 – and given interest rates were 0.1 per cent for most of 2020, it’s fair to say the increased payments they face will be a big shock to the system.

One mortgage broker suggests the fall-out will dampen down house prices and many need to reassess their financial positions.

Ranald Mitchell, from Charwin Mortgages, said: “For many borrowers, 2025 will prove the hangover after the house party. Millions are waking up to find their cheap-as-chips pandemic mortgage deals have vanished, replaced with monthly payments that bite.

“For five-year fixers coming off sub-2% rates, some are facing £300–£500 extra a month. It’s not just a shock, it’s a financial slap. This won’t crash the market, but it will chill it. Potential movers may pause and reflect on their new monthly financials. The days of borrowing big and breezing through affordability checks are over.”

Across most global markets, shares were on the up overnight and today despite those tariffs coming into effect – the UK’s FTSE 100 is very much an outlier there, as AJ Bell’s Danni Hewson explains.

“The FTSE 100 is struggling to make meaningful progress this week, running to stand still as investors weigh the latest economic, geopolitical and corporate developments,” says Ms Hewson.

“Not helping today was several heavyweight names trading without the rights to their dividend. This held the index back despite gains on Wall Street and across Asia. Investors are largely greeting widespread tariffs taking effect with a shrug.

“The exception again was India, with the Trump administration ordering a big increase in tariffs to punish the country for buying and selling Russian oil.”

With economic growth still a struggle to find, you may hear the term “stagflation” being used.

That shouldn’t the case, says one industry expert – it’s not the situation the UK faces right now.

Will Hobbs, from Barclays private bank and wealth management, said current indicators do not suggest the UK is any more at risk of that than previously.

“Given the current margins for error in the UK’s economic dataset, it remains possible to tell almost any story you want on the UK’s economic outlook. Our optimistic [view] rests in part [with] household balance sheet and rising real incomes, both of which provide a buffer against broader uncertainty.

“Of course, there are multiple factors to consider. We, like the consensus, expect the Bank of England to cut rates, likely following a fairly even vote split.

“We would resist overuse of the term ‘stagflation’ to describe the UK’s position. The misery indices (unemployment plus inflation), looks unremarkable today relative to the experience of the last century.”

If you have money in a savings account, it’s the other side of the see-saw to mortgages: rates going down mean you’ll earn less interest.

As there’s still a bit of a fierce battle raging among banks and building societies for customers, it’s still possible to get good deals if you are happy to lock in money for a fixed period of time or contribute regular amounts, with several offering around 4.5 per cent or even more.

There are always terms and conditions to be met, so ensure it suits your circumstances, but the opportunity remains there to save and earn money at a better rate than inflation, which currently sits around 3.5 per cent.

Do be aware of the amount of interest you can earn without being taxed, though. If your savings account interest rate isn’t fixed, banks can always change the rate you get up or down.

A tax-efficient way of saving is to use a Cash ISA, where everyone has a £20,000 personal allowance each year.

Credit card repayments and bank or car loans are of course also affected by interest rates, as the amount they all charge for borrowing will be altered.

For credit card users, it’s always ideal to pay off the full amount each month if you are able to, to avoid interest being charged at all – depending on your circumstance and the account type, they can be one of the more costly ways to borrow.