The Bank of England is preparing for the most rapid interest rate reduction since the 2008 financial crisis. It is expected that next week the base rate will be lowered from 4.5% to 4.25%, marking the first step in a series of successive cuts that could bring the rate down to 3% over the next six months, reports the Baltimore Chronicle, citing Sky News.
These measures aim to stimulate an economy showing signs of a slowdown. The International Monetary Fund has revised the UK GDP growth forecast for 2025 downward from 1.6% to 1.1%. Economists point to global economic uncertainty, particularly U.S. trade policy, as one of the factors restraining growth.
In anticipation of the Bank’s rate decision, major UK lenders, including Barclays, HSBC, NatWest, Halifax, Nationwide, and Santander, have already lowered fixed mortgage rates below 4%. For instance, the lowest two-year fixed rate has dropped from 4.22% in early December to 3.79%, allowing borrowers to save up to £564 annually on a £200,000 mortgage over 25 years.
Approximately 1.68 million homeowners in the UK have fixed-rate mortgage deals expiring this year, making these interest rate reductions timely for many. However, the shift also reflects concerns about economic growth and the impact of external factors, such as potential U.S. tariffs, which could limit the UK’s economic expansion.
Analysts, including Morgan Stanley and UBS, forecast further interest rate cuts in upcoming Bank of England meetings, with rates possibly falling to 2.75% in the first half of 2026. These policy moves are intended to support domestic demand and cushion the effects of global economic challenges.
Earlier we wrote that russian economy on the verge of collapse.