The Bank of England has kept the base rate the same after two cuts this year
We’ve taken a look at the thinking behind this latest decision, and whether we’re likely to see any more cuts in 2025.
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What is the Bank of England base rate?
The interest rate set by the Bank of England (BoE) is known as the base rate.
The current rate was decided on 19 June 2025, holding at 4.25%, after being cut from 4.5% to 4.25% in May this year. This is the lowest rate since March 2023.
Six members of the Monetary Policy Committee (MPC) voted to keep the base rate at 4.25% while three members wanted it cut further to 4%.
source: tradingeconomics.com
| Date of announcement | Rate | Change |
| June 2025 | 4.25% | No change |
| May 2025 | 4.25% | -0.25 percentage points |
| March 2025 | 4.5% | No change |
| February 2025 | 4.5% | -0.25 percentage points |
| December 2024 | 4.75% | No change |
| November 2024 | 4.75% | -0.25 percentage points |
| September 2024 | 5% | No change |
| August 2024 | 5% | -0.25 percentage points |
| September 2023 to June 2024 | 5.25% | No change |
| August 2023 | 5.25% | +0.25 percentage points |
| June 2023 | 5% | +0.5 percentage points |
| May 2023 | 4.5% | +0.25 percentage points |
| March 2023 | 4.25% | +0.25 percentage points |
| February 2023 | 4% | +0.5 percentage points |
| December 2022 | 3.5% | +0.5 percentage points |
| November 2022 | 3% | +0.75 percentage points |
| September 2022 | 2.25% | +0.5 percentage points |
| August 2022 | 1.75% | +0.5 percentage points |
| June 2022 | 1.25% | +0.25 percentage points |
| May 2022 | 1% | +0.25 percentage points |
| March 2022 | 0.75% | +0.25 percentage points |
| February 2022 | 0.5% | +0.25 percentage points |
| December 2021 | 0.25% | +0.15 percentage points |
| March 2020 | 0.1% | -0.15 percentage points |
Will interest rates continue to fall in 2025?
Last month, markets were predicting three or four more cuts in 2025, bringing it down to 3.5% or 3.25% by year end. But some experts are now suggesting it could be more like two taking interest rates down to 3.75% by the end of the year, with one cut coming at the next meeting in August.
The Bank’s told us that any changes will be “gradual and careful”.
But anything could happen. There’s still huge uncertainty in the economy at home and around the world. There are also worries that the conflict between Israel and Iran, a major oil producer, could drive up energy costs, as well as overall prices, which would impact further rate decisions.
Of course, though it’s not the only reason to change the base rate, inflation is the key one (more on this below). The latest inflation rate in the UK is 3.4%, the highest rate since the start of 2024. The Bank of England suggests inflation’s likely to stay around 3.5% over the second half of 2025 before falling back towards the 2% target from next year.
But, as ever, everything can change and none of this is guaranteed!
When is the next interest rate decision?
The rate is set every six weeks or so by the Bank of England Monetary Policy Committee, a group of nine people, with the majority vote deciding whether the rate goes up, down or stays the same.
The next meetings will be on:
- 7 August 2025
- 18 September 2025
- 6 November 2025
- 18 December 2025
The base rate and inflation
The driver for changing the base rate right now is inflation, which has been higher than wanted since late 2021.
Increasing interest rates is seen as the key (perhaps only) way to battle inflation, the idea being we’ll save more or have more expensive debts (like mortgages), leading to us spending less. This will force suppliers to lower prices, which in turn will see the inflation rate drop (though in most cases that doesn’t mean prices fall, they just get more expensive at a slower rate).
However, those rate hikes take time to filter down and for the inflation rate to – in theory – come under control. And if you keep increasing rates the danger is it pushes the economy into recession and cause hardship for borrowers, particularly those with mortgages.
Likewise if the Bank decides to cut the rate too early, it might not have done enough, leading to a reverse later on.
How the base rate impacts your money
The BoE rate is a large part of what high street and online banks and lenders use to inform the rates they offer. This means it will impact the cost of borrowing on things like mortgages, loans and credit cards, but also how much you can earn on savings.
Sometimes it’s a direct correlation if you have a product with a tracker rate – something that literally changes up or down in line with the BoE rate. In that case you’ll see an instant change.
On other products you might not see an instant change – if at all. So it pays to shop around to see if you can get a better deal.
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How the decision impacts your savings
Since a peak in autumn 2023, rates have generally been falling as banks price in both actual and predicted cuts (they’re fast to pass these on, but slow to give us the increases).
With the base rate being held, you shouldn’t see any immediate or significant changes to your savings. However, that’s not to say rates won’t change at all in line with the current downward trend.
If you can fix, i.e. you won’t need to access your money for a set time, and want certainty, you’ll want to grab one of these fixed accounts ASAP. If we’re expecting a base rate cut in August, it won’t be long before the predicted additional cuts are factored in.
The highest-paying savings accounts – our picks
- 6% AER current account from Santander (limited to £4,000 deposit and has monthly fee)
- 7% AER regular saver from First Direct
- 4.86% AER easy access Cash ISA from Trading 212
Read more about these and the other best savings accounts in our best buys guide
How the decision impacts your mortgage
As with savings, you’ll not see any change with your mortgage linked to the latest base rate decision.
Last month, those with existing tracker deals saw their rates come down by the same 0.25 percentage points almost immediately, a cut of £29 a month. And those on their lender’s variable rate (SVR) may have also seen some changes.
But in the long-term, the impact of base rate changes isn’t as clear-cut. That’s because while mortgages rates are directly based on the base rate, they’re actually influenced by something known as swap rates – effectively where they think the rate will be in the future.
So many fixes price in cuts and rises to the base rate based on previous predictions so changes are made well in advance of any Bank of England decisions.
But will rates fall in coming months? Well, the markets have signalled we could see yet more cuts this year, so lenders will be working out whether to factor those in too.
However, don’t expect them to fall where they were just a few years ago.
It’s always worth speaking with a mortgage broker who can advise on different strategies – though since no one knows what will happen this still won’t guarantee any savings.
And anyone who is really struggling to make their repayments, it’s important to talk to your lender to see if anything can be worked out – though bear in mind missing payments can impact your credit report.
If it’s impacting other essential spending, then see whether those companies can support reduced repayments. And if debts have built up, speak to a debt charity.
How it impacts other borrowing
With the base rate being held, you’re unlikely to see much difference to the rates of your existing loans or new deals either.
Regardless, makes sure you always try and go for 0% deals if you can get them, or to use your savings to pay for things or clear debts rather than take out new ones.
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If you have money given to you and its put you over the maximum threse hold
Both my house/contents insurance and dental plan have increased above the rate of inflation. With proposed increases in council tax, it may still be a few months before interest rates reduce.
Shawbrook bank have just notified me that the current variable rate on its instant access account of 4.99% will be reduced to 4.89% in March so it seems they are anticipating a base rate reduction then. Time to fix perhaps?
If you have a child, consider some of the children easy access savings accounts for a higher savings rate. These include Kent Reliance (3.01% up to £25k), Bath Building Society (2.5% up to £5k), Penrith (2.45% up to £10k), Leeds Building Society (2.25% up to £1m). I’ve placed cash in all of those, beats having it all stuck in Chase or Virgin Money!