The Bank of England is anticipated to lower interest rates to 4% in its fifth reduction since August, marking the lowest level in over two years. This decrease could lower monthly mortgage payments for homeowners but will negatively affect savers by diminishing returns. Concurrently, the Bank will release economic forecasts following a stagnation in growth. While inflation exceeds the 2% target, further rate cuts are likely, with predictions indicating borrowing costs may reach 3% by late 2026.
A lower base rate can reduce monthly mortgage costs for some homeowners but it also means a smaller return for savers.
Interest rates are expected to be cut despite inflation climbing above the Bank of England's 2% target.
Savings rates are getting worse and any base rate reductions will spell further misery for savers, according to finance experts.
We are expecting more cuts, said Liz Martins, forecasting that borrowing costs will fall to 3% by late 2026.
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