The United Kingdom’s economic landscape is bracing for a significant shift, with experts widely predicting that the Bank of England’s Monetary Policy Committee (MPC) is poised to cut interest rates UK further. This anticipated move comes as the central bank grapples with persistent stagnant growth and a noticeable weakening in the nation’s UK jobs market, signaling a crucial pivot in monetary policy aimed at stimulating the economy.
A consensus among most economists points to a reduction of 0.25 percentage points, bringing the base rate down to 4% as early as Thursday. This decision by the MPC is meticulously watched, as it directly influences a myriad of financial aspects, from personal loans to the broader economic outlook for businesses across the country.
For many households, particularly those with variable-rate mortgages, this potential interest rates UK cut offers a beacon of hope. It could translate into significant relief for mortgage holders, potentially ushering in an era of more affordable mortgage relief deals and easing the financial burden on millions of Britons navigating current cost-of-living challenges.
Bank of England Governor Andrew Bailey had previously indicated the institution’s readiness to adjust monetary policy if the UK jobs market displayed clear signs of softening. Recent economic data appears to validate this condition, lending weight to the expectation of an imminent rate reduction.
Further compounding the pressure on policymakers, data from the Office for National Statistics (ONS) has revealed that the UK economy experienced contractions in both April and May. This sustained period of negative growth reinforces the necessity for intervention, making an interest rates UK cut a critical tool in the Bank’s arsenal to encourage borrowing and investment.
Andrew Goodwin, a prominent chief UK economist for Oxford Economics, underscored the near certainty of the upcoming decision, stating it would be a “major surprise” if the MPC opted against a 0.25 percentage point cut on Thursday. His analysis highlights the prevailing sentiment within economic circles regarding the imperative nature of this monetary policy adjustment.
Goodwin further elaborated that with pay growth continuing its cooling trend and the Bank’s current rate remaining significantly above what many committee members consider a neutral level, the rationale for a cut is robust. This confluence of factors creates a compelling case for the MPC to act decisively in its pursuit of economic stability.
However, despite the strong likelihood of a cut, Goodwin tempered expectations regarding the pace of future reductions throughout 2025. He noted that signs of a slower rate of job losses, rather than outright job creation, “significantly reduce the urgency of the situation” for more aggressive monetary policy easing in the immediate future.
Internally, the MPC is likely to see a varied vote, with predictions of some members favoring maintaining the current rate and others advocating for a larger 0.5 percentage point cut. This internal dynamic suggests a careful, gradual, and non-committal approach from members in the “middle ground,” ensuring that any monetary policy changes are well-measured and responsive to evolving economic data.
