The Bank of England is expected to hold interest rates steady when it announces its latest decision on Thursday. Bank rates have a significant impact on borrowing costs for households, businesses, and the government, as well as returns for savers. In February, following the last meeting of the Bank of England's Monetary Policy Committee (MPC), interest rates were lowered from 4.75% to 4.5%.
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03-20, 2025While no change is expected in the announcement at 12:00 GMT, many analysts are predicting two further rate cuts before the end of the year. The Monetary Policy Committee consists of five women and four men, including economists and key figures from the Bank of England. The committee is chaired by the Governor of the Bank of England, Andrew Bailey. Markets will be closely watching how these members vote.
The committee meets eight times a year, and its decisions have a wide-ranging impact on everything from mortgage costs to the ability of businesses to invest. Its primary goal is to use interest rates to ensure that the inflation rate (the annual rate of price increases) reaches the government's target of 2%. The latest calculations showed that inflation rose to 3% in January, which is one reason commentators expect interest rates to remain unchanged this time. Lowering interest rates could stimulate consumers to spend more and push up inflation.
Paul Heywood, Chief Data and Analytics Officer at credit agency Equifax UK, said: "Bank of England policymakers have been warning about inflation and continued uncertainty, so it is unlikely that this month's meeting will bring further rate cut relief for homeowners." Mortgage rates have been falling slowly, largely because markets and lenders expect further cuts in bank rates later this year. The Monetary Policy Committee has cut interest rates three times since August 2024, bringing them to their lowest level in 18 months. However, the Bank of England has also stated that it will take a "gradual and cautious" approach to further rate cuts. Lower interest rates could also mean lower borrowing costs for loans and credit cards, but also lower returns on savings.
These decisions will be driven by the outlook for the UK economy. Following the February Monetary Policy Committee meeting, the Bank of England halved its economic growth forecast for this year, although it raised its forecasts for 2026 and 2027. It said it now expects the UK economy to grow by 0.75% in 2025, down from its previous estimate of 1.5%. At the same time, it said it expects inflation to rise to 3.7% and will need until the end of 2027 to fall back to its 2% target. In addition, there is uncertainty in domestic and global economic policies.
Next week, Chancellor Rachel Reeves will deliver the Spring Statement, which is unlikely to include major policy announcements but will include the official forecasting body's – the Office for Budget Responsibility – view on the direction of the UK economy. It will also include some details of spending limits for government departments. It is widely believed that the UK economy is underperforming, while global factors such as US trade tariffs have an indirect impact on the UK.
