The Bank of England<\/strong> is expected to lower interest rates for the first time in months, as it seeks to counteract the UK\u2019s sluggish economic growth. Economists anticipate a 0.25 percentage point reduction<\/strong>, bringing the rate down from 4.75% to 4.5%<\/strong>, a move closely watched by markets, businesses, and mortgage holders.<\/p>\n\n\n\n
This decision follows a decline in inflation to 2.5%<\/strong> in December, edging closer to the Bank\u2019s 2% target<\/strong> but still above its preferred level. With economic uncertainty heightened by global trade tensions and domestic budgetary changes, policymakers are weighing the risks of inflation against the need to stimulate growth.<\/p>\n\n\n\n
While the cooling of inflation supports a rate reduction, uncertainty remains. The UK economy stagnated<\/strong> in late 2023, with November\u2019s growth figures coming in weaker than expected. Analysts at Capital Economics<\/strong> suggest that easing monetary policy is aimed at “supporting an economy that appears to have ground to a complete halt and preventing inflation <\/a>from taking off again.\u201d<\/p>\n\n\n\n
The anticipated rate cut will have immediate effects on mortgage <\/a>holders, particularly those with tracker and variable-rate loans<\/strong>. An estimated 629,000 mortgage-holders<\/strong> on tracker deals could see their monthly repayments fall by around \u00a329<\/strong> if the Bank proceeds with the expected reduction.<\/p>\n\n\n\n
While homeowners with mortgages stand to benefit, savers could lose out<\/strong> as banks are likely to lower the interest rates offered on savings accounts. For businesses, lower borrowing costs could encourage investment and expansion<\/strong>, though firms remain wary of budget-related cost pressures, such as rising National Insurance<\/a> contributions and higher minimum wages<\/strong> set for April.<\/p>\n\n\n\n