Interest rates live updates: Bank of England base rate cut to help slash mortgage bills
Inflation fell below the Bank of England’s 2% target in September for the first time in three years
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The Bank of England has cut interest rates for the second time this year, in good news for mortgage-holders and other borrowers.
Policymakers at the Bank of England opted to reduce interest rates to 4.75 per cent today, down from 5 per cent. They had also been cut by 0.25 percentage points in August, which marked the first reduction since 2020, before being kept the same in September.
As a result, homeowners with tracker mortgages will see their payments fall by an average of £28.98 a month, while standard variable rates should reduce by an average of £17.17, according to UK Finance.
The decision by rate-setters today comes after chancellor Rachel Reeves announced nearly £70bn of extra annual spending, funded by business-focused tax hikes and additional borrowing, and as the UK awaits the impact of a second Donald Trump presidency in the United States.
Bank of England governor Andrew Bailey struck a more cautious tone on future cuts, but insisted there is a “good and encouraging” direction on falling inflation in spite of “greater global uncertainy”.
UK house prices surpass 2022 to hit record high
Average UK house price a record high last month, with the cost of a home averaging just below £294,000, according to an index.
House prices increased by 0.2 per cent in October, marking the fourth monthly increase in a row, Halifax reported.
The average house price was £293,999, surpassing a previous peak in June 2022.
Property values increased by 3.9 pe rcent annually, slowing from a 4.6 per cent increase in September.
Pound slightly up ahead of interest rates announcement
The pound was up slightly against the US dollar as of 10am, sitting at $1.2913 compared to $1.2890 at the previous close.
The euro at 10am was £0.8325 compared to £0.8325 at the previous close.
Norway’s central bank keeps interest rates at 16-year high
Sweden's central bank has cut its key interest rate today to 2.75 per cent from 3.25 per cent, as expected, while the Norwegian central bank held its policy interest rate unchanged at a 16-year high of 4.5 per cent.
Comment | How a Trump presidency could blow the British economy out of the water
What will Keir Starmer be most worried about as he contemplates a second Donald Trump presidency? Until recently, Ukraine has been top of the UK government’s list, given the prospect Trump might unilaterally try to end the war – and not necessarily on terms favourable to Ukraine.
However, it is now dawning on UK ministers that Trump’s threat to impose 60 per cent tariffs on imports from China and 10 or 20 per cent on those from everywhere else including the UK, could inflict huge damage on the British economy. There are growing fears the UK’s trade with its biggest single export market in the US will be hit hard.
Read the full analysis by our columnist Andrew Grice here:
How a Trump presidency could blow our own economy out of the water
The UK risks becoming collateral damage in Donald Trump’s threat to global trade, writes Andrew Grice – and that’s not the last of the government’s worries
Trump win could cause “full-blown recession” in Europe, ING says
Analysis from ING has warned that Trump’s victory in the US could make “Europe’s worst economic nightmare comes true” as the president-elect looks to introduce a 10 per cent tariff on all non-US goods.
Researchers from the Dutch investment bank wrote: “A looming new trade war could push the eurozone economy from sluggish growth into a full-blown recession. The already struggling German economy, which heavily relies on trade with the US, would be particularly hard hit by tariffs on European automotives.
“Additionally, uncertainty about Trump’s stance on Ukraine and NATO could undermine the recently stabilised economic confidence indicators across the eurozone. Even though tariffs might not impact Europe until late 2025, the renewed uncertainty and trade war fears could drive the eurozone economy into recession at the turn of the year.”
Cost of living fears rise as pubs and supermarkets warn of Budget “double whammy”
Several British companies have warned of rising costs to consumers in the wake of Labour’s Budget.
Business leaders from Marks and Spencer, Wetherspoon and Persimmon all join a growing list of bosses who have expressed concern.
Marks and Spencer’s Stuart Machin said the retailer is expecting to take a £60 million hit due to the “double whammy” of rises to employer national insurance contributions and the national living wage.
Read more:
Cost of living fears rise as pubs and supermarkets warn of Budget “double whammy”
Outspoken Wetherspoons boss Tim Martin is amongst those expressing concern
Average UK house price hit record high in October
House prices increased by 0.2 per cent in October, the fourth monthly increase in a row, Halifax has reported. The average house price was £293,999, surpassing a previous peak set in June 2022 (£293,507).
Property values increased by 3.9 per cent annually, slowing from a 4.6 per cent increase in September.
Amanda Bryden, head of mortgages at Halifax, said: “That house prices have reached these heights again in the current economic climate may come as a surprise to many, but perhaps more noteworthy is that they didn’t fall very far in the first place.
“Despite the headwind of higher interest rates, house prices have mostly levelled off over the past two and a half years, recording a 0.2 per cent increase overall.
“That’s a significant slowdown compared to the 21 per cent rise we saw in the equivalent period from January 2020 to the summer of 2022.”
Bank of England expected to cut interest rates today
Interest rates are widely expected to be cut today, with most experts predicting a drop from 5 per cent to 4.75 per cent. The Bank of England decision will announced at midday UK time.
The change will make the cost of borrowing cheaper in the UK, but also lessens returns on savings.
Interest rates are a key tool that the Bank uses to control the level of inflation. After the drop from 5.25 per cent to 5 per cent in August, inflation also dropped unexpectedly.
In September, the inflation rate (CPI) reached 1.7 per cent, dropping below the Bank’s 2 per cent target in S for the first time in more than three years.
This is understood to be a driving factor behind today’s decision. However, tax changes announced at Labour’s Budget in October and Donald Trump’s victory in the US have caused some market uncertainty.
Inflation fell below the Bank of England’s 2 per cent target in September for the first time in three years
Experts said inflation falling below the Bank’s 2 per cent target level will encourage policymakers to continue easing interest rates, releasing some more pressure on borrowers and mortgage holders across the UK.
Andrew Goodwin, chief UK economist for Oxford Economics, said the outcome of the Bank’s Monetary Policy Committee (MPC) meeting “looks virtually certain”, although some members could still opt for rates to be kept the same.
MPC members Huw Pill and Megan Greene are the most “unpredictable”, he said, with lingering concerns over services sector inflation and wage growth.
The Monetary Policy Committee meets in the week after Chancellor Rachel Reeves announced almost £70 billion of extra annual spending, funded by business-focused tax hikes and additional borrowing.
The Office for Budget Responsibility (OBR) said the sharp increase in spending will contribute to higher inflation, although it will also help drive stronger economic growth.
Inflation is forecast to average 2.5 per cent this year and 2.6 per cent next year before coming down, assuming “the Bank of England responds” to help bring it to the target rate, the OBR said.
Economists are rolling back predictions for a rapid succession of rate cuts over the next year
James Smith, developed market economist for ING, said: “The Budget won’t change the Bank’s decision to cut rates again this week.
“But it does question our long-held view that rate cuts will speed up from now on.
“The risk is that this happens later, and the Bank decides to keep rates on hold again in December.
“A cut at the final meeting of the year looks fairly 50:50, and a lot will depend on the two inflation reports we get between now and Christmas.”
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments