Base Rate Reduced By Bank of England

The MPC has voted unanimously to reduce the base rate to 4.50%. 7 of the 9 members voted in favour of a 0.25% reduction, with 2 even voting for a 0.5% reduction to 4.25%.

The bank had been expected to make gradual cuts throughout 2025, but have said they will be careful with reductions following uncertainty about trade policy in the USA. Central banks will be paying close attention to the impacts of newly imposed trade tariffs, which could in turn effect any interest rate changes.

Inflation is predicted to rise further than initially set out at the end of 2024, with a colder than expected winter contributing to higher energy prices. Unemployment is also expected to rise and the BoE has cut growth forecasts from 1.5% to 0.75%.

Fixed rate mortgage products had already priced in a reduction to the base rate, so todays announcement is unlikely to result in significant cuts to product ranges. Tracker mortgage rates will be updated in the coming weeks and reflected from the following months mortgage payment.