Interest rates LIVE: Bank of England urged to cut interest rate to 4%

The Monetary Policy Committee (MPC) will meet today to determine whether the Base Rate will rise, fall, or remain the same. Most experts predict a quarter-point reduction from 4.5% to 4.25% to give the economy a boost after President tariff turbulence.

The base rate significantly impacts the cost of mortgages and loans, and influences the banks offer on accounts. It peaked at 5.25% in late 2023, but policymakers have reduced it to 4.5% in the months since as inflation dropped to more manageable levels. It's currently rising at a pace of 2.6% - far lower than the 11% highs seen during 2022's energy crisis. The Bank of England typically raises interest rates when inflation is high to curb spending and slow price increases.

Markets expect inflation to tick up again over the summer as the effects of Autumn Budget begin to filter through. However, the threat of a demand shock from Trump's tariffs could prompt the Bank to prioritise the risk to economic growth, potentially leading to a cut in the Base Rate today.

As it stands, markets have priced in three potential cuts to be made in 2025, up from two.

Some economists have urged the MPC to cut rates even further to 4% rate instead. The Institute of Economic Affairs' Shadow Monetary Policy Committee (SMPC) said: "The SMPC is concerned about the effect of US tariffs, with broad agreement that they will lower economic growth and raise inflation, though the latter is mainly in the US."

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