Bank of England Cuts Interest Rate to 4.25% – What It Means for You

In a significant move for the UK economy, the Bank of England has lowered its base interest rate from 4.5% to 4.25% — the lowest level since May 2023.The decision came from a split vote within the nine-member Monetary Policy Committee:

  • 5 members voted in favour of a 0.25% cut to 4.25%
  • 2 members supported a deeper cut to 4%
  • 2 members voted to keep rates unchanged

Why the Bank of England Is Cutting Rates

This rate cut is designed to stimulate the economy by encouraging consumer spending and business investment. Lower interest rates reduce the cost of borrowing — which means cheaper mortgages, personal loans, and credit. However, savers may see lower returns on cash deposits as a result.

According to the Bank’s updated forecast, the UK is expected to see stronger short-term economic growth in 2025. However, the outlook for growth beyond this year is more modest, reflecting continued global and domestic challenges.

What This Means for You

The Bank of England cut could mean improved mortgage affordability and refinancing opportunities for homeowners and first-time buyers. Now may be a good time for savers to revisit their savings strategy or consider alternative investment options.

Read a glossary of mortgage jargon to help you.

What is Bank Rate

As Independent Financial Advisers, we can help you review how these changes affect your personal finances and explore options to protect your long-term goals.

Trade Developments with the US

Bank of England Governor Andrew Bailey also commented on the recently announced UK-US tariff deal, expressing optimism. However, he noted that he had not yet been briefed on its full details and potential impact on trade or inflation.

Next Steps

Understanding how the Bank of England interest rate changes affect your financial position is essential. If you’d like tailored advice on mortgages, savings, or investments in light of this rate cut, get in touch today.

Let’s ensure your financial plan stays on track — even as the economy shifts.