UK Interest Rate Cut Likely as Bank of England Looks to Ease Economic Pressure

The Bank of England is widely expected to cut its key interest rate from 4.5% to 4.25% this Thursday—a move that could make borrowing cheaper but lower returns for savers.

This would be the fourth cut since last year’s 5.25% peak and signals the Bank’s continued effort to stimulate the economy amid global uncertainty and rising living costs.

Interest rate changes affect everything from mortgages to savings accounts. Around 600,000 UK homeowners with tracker mortgages could see immediate relief—saving an average of £29 per month. But for those trying to buy a first home, like Liverpool medical student Samren Reddy, a small rate cut may not be enough to offset the rising cost of living.

Savers, meanwhile, might see their instant-access savings returns dip, unless they lock money into long-term fixed deals which still offer relatively good rates, according to experts.

The decision comes just as inflation data shows a 2.6% rise—slightly above the 2% target—and ahead of wider global market pressures, including trade uncertainty from US policy shifts.

The official announcement is set for 12:02 BST on Thursday, following a two-minute silence for VE Day.