Markets Predict Bank of England Rate Cut to 4.25% Next Month

Financial markets and analysts widely expect the Bank of England to implement up to three interest rate cuts this year, with the first anticipated as soon as next month, in response to a slowing UK economy and ongoing global trade tensions stemming from Donald Trump's tariffs. The International Monetary Fund has downgraded its UK economic growth forecasts and predicts a temporary inflation spike due to higher energy and water bills, but suggests that the Bank of England has room to cut rates to help support growth. Megan Greene, a member of the Bank's rate-setting committee, noted that US trade tariffs may actually exert downward pressure on UK inflation by making the UK a more attractive destination for cheaper imports, though she cautioned that there are both inflationary and disinflationary forces at play. Additionally, a recent rise in the value of the pound could further ease inflation pressures. Lenders are already lowering mortgage rates in anticipation of these cuts, which could benefit borrowers facing higher remortgaging costs. The balance between inflation risks and the need to support economic activity remains central to the Bank's decision-making process.