Interest rates were cut for the fourth time in 12 months today as the base rate was moved down from 4.5% to 4.25%.
The 0.25% drop – good news for folks with tracker mortgages – came after a 5-4 vote by the Bank of England’s Monetary Policy Committee. Two members preferred to reduce the rate by 0.5 percentage points to 4% while two preferred to maintain it at 4.5%.
Inflation target 2%
In a press statement the Bank said the MPC “sets monetary policy to meet the 2% inflation target, and in a way that helps to sustain growth and employment.”
Bank of England governor Andrew Bailey told a press conference the cut in the base rate was driven by softening inflation. Twelve-month CPI inflation fell to 2.6% in March from 2.8% in February.
Bailey said any further reductions would be “gradual,” and expressed cautious optimism about US President Donald Trump heralding a US-UK trade deal, albeit without fine detail finalised as yet.
Year-end base rate could be 3.75% – Rightmove
Matt Smith, Rightmove’s mortgage expert, said: “If the Bank does make two-to-three more cuts of 0.25% this year, which many are forecasting, we could close out the year with Base Rate lowered to 3.75%, or further.
“While average mortgage rates have continued to slowly come down in the past two weeks, some lenders have taken their time to pass on the benefits of the expected base rate cut, but we could now expect further reductions in the coming days and weeks.”
