The Bank of England Pondering Potential Reductions in Interest Rates?
The financial markets are predicting that the first quarter-point cut in interest rates will occur in June, but for now, the Bank of England has decided to maintain the base rate at 5.25%. This decision, according to Jason Ferrando, CEO of easyMoney, adds further stability to the property market.
However, the property market is not without its challenges. Many landlords have been suffering from expensive variable rate products, and the maintenance of high interest rates means that they continue to struggle. Jason Harris-Cohen, CEO of Open Property Group, believes a rate cut is necessary for the property market to move forward quickly.
Despite the decision to maintain interest rates, the Bank of England is working to ensure inflation rates continue to decrease. Inflation dropped more than expected earlier in the week, as reported by the ONS. The Bank's governor, Andrew Bailey, indicated that while rates are on a downward path, the pace of future cuts depends heavily on economic developments, especially inflation, which remains somewhat sticky.
The Bank of England is waiting to ensure that inflation will fall back to their 2% target and stay there before making any cuts to interest rates. In a recent statement, the Bank stated that cuts to interest rates are "in play." Andrew Bailey, governor of the Bank of England, claimed that further encouraging signs of decreasing inflation have been observed.
The UK property market has shown increased activity levels since interest rates were held at 5.25% last September. Guy Gittins, CEO of Foxtons, stated that the market has shown signs of recovery, but a rate cut could further stimulate growth.
The Bank of England kept interest rates at 5.25% on 21 March 2024, but markets generally expect one more cut in 2025 and further reductions toward 3.5% or lower in 2026. The exact timing and size of these cuts remain uncertain due to ongoing inflation risks and economic considerations.
Raul Varzar is the photographer for the accompanying image.
[1] Bank of England, Monetary Policy Report, February 2025. [2] Financial Times, "Bank of England Holds Rates as Inflation Remains Sticky," 21 March 2024. [4] BBC News, "Bank of England Cuts Interest Rates to 4%," 7 August 2025. [5] Reuters, "Bank of England Forecasts One More Rate Cut in 2025," 15 February 2025.
[1] The ongoing maintenance of high interest rates by the Bank of England is detrimental to some landlords, as they struggle with expensive variable rate products in the housing market.
[2] Jason Harris-Cohen, CEO of Open Property Group, advocates for a rate cut to help the property market progress more swiftly, especially considering the continued struggles of many landlords in the business sector.
