Base rate drops to 4.75%

As had been widely expected, the Bank of England reduced the interest base rate to 4.75% last week. This was due to inflationary pressures easing in recent weeks.

The Bank expects inflation to increase slightly again over the next year to around 2.75% and then fall back to the 2% target after that.

In their quarterly report, the Bank outlined that they will be taking a cautious approach and so will not be cutting rates too quickly or too much. It seems unlikely there will be a further cut when the Bank next meet on December 19^th.

However, the Bank have said that “if things evolve as expected, it’s likely that interest rates will continue to fall gradually.”

Obviously, a rate cut can be a mixed blessing depending on whether your business is investing or borrowing. However, if inflation is stabilising this may mean a more stable economy and more certainty for businesses in the year ahead.

See: https://www.bankofengland.co.uk/monetary-policy-report/2024/november-2024