The Bank of England’s next move on interest rates is a key focus for economists, investors, and households across the UK. With inflation showing signs of easing and economic growth still fragile, speculation is growing around a possible rate cut in 2025.
Currently, the base rate stands at 4.25%, but shifting global conditions and domestic data could prompt the Monetary Policy Committee (MPC) to act.
As the MPC prepares to meet on August 7, 2025, many are asking: will interest rates be cut again? This blog explores the key factors, expert forecasts, and potential impact on the UK economy.
What Factors Influence the Bank of England’s Decision to Change Interest Rates?
The Bank of England adjusts interest rates to control inflation and support stable economic growth. The Monetary Policy Committee reviews key data to decide whether to cut, raise, or hold rates.
Key factors include:
- Inflation trends: Whether inflation is above or below the 2% target
- Economic growth: GDP performance, industrial output, and consumer spending
- Unemployment levels: Indications of labour market health and wage growth
- Global influences: Trade disputes, tariffs, and geopolitical tensions
- Exchange rate movement: Effects on imports, exports, and inflation
- Consumer confidence: Impact on retail activity and credit demand
- Fiscal policy: Government spending and taxation policies
- Market forecasts: Bond yields, swap rates, and investor expectations
The BoE’s rate adjustments aim to strike a balance between stimulating growth and controlling inflation. When inflation rises, higher interest rates are used to cool spending.
When the economy slows, lower rates can encourage borrowing and investment. In 2025, this balancing act remains as critical as ever.
How Often Does the Bank of England Review Base Rates?
The Bank of England reviews interest rates eight times a year through scheduled Monetary Policy Committee (MPC) meetings. These meetings typically occur every six weeks and are announced in advance on the BoE’s calendar.
Each review concludes with a statement at 12:00 noon UK time outlining any changes to the base rate, along with an explanation of the MPC’s rationale.
While the standard meeting frequency is consistent, the BoE retains the authority to call emergency meetings if required, as was the case during the COVID-19 pandemic.
These additional sessions are reserved for responding to exceptional economic events. The 2025 schedule reflects the importance of consistency in monetary policy, ensuring the markets and public are informed well in advance.
When Is the Next Bank of England Base Rate Meeting?
The next Bank of England base rate meeting is scheduled for Thursday, August 7, 2025, with the decision announcement at 11:00 UTC (12:00 noon UK time).
This highly anticipated meeting will determine whether the Bank maintains the current 4.25% base rate or opts for a reduction. The last rate change occurred in May 2025, when the BoE cut rates by 25 basis points.
Given current inflation trends and signs of economic softening, analysts and traders are increasingly expecting a rate cut in this upcoming session. The August decision could set the tone for further policy changes through the remainder of the year.
How Are Inflation and Economic Indicators Impacting Rate Predictions?
Inflation remains one of the most critical drivers of interest rate changes. The Bank of England targets an inflation rate of 2%, and recent figures show a decline in consumer prices, though not as sharp as expected. The June 2025 CPI came in at 3.6%, slightly above forecasts.
Labour Market Pressures
Unemployment has risen to its highest level since the pandemic, a signal that the labour market is weakening. Wage growth has also started to moderate, reducing inflationary pressures.
Economic Growth Outlook
GDP growth remains sluggish. A stronger pound and falling global demand have impacted exports. Domestic consumption is also slowing as households grapple with high borrowing costs.
These factors combined indicate the BoE may have enough justification to ease rates, albeit cautiously, to support the economy without reigniting inflation.
What Are the Latest Interest Rate Predictions for the UK?
Financial markets are overwhelmingly expecting a rate cut at the August 7, 2025 MPC meeting. Analysts suggest the base rate may be lowered from 4.25% to 4.00% initially, with the possibility of another cut later in the year.
Governor Andrew Bailey has stated the BoE will proceed with “gradual and careful” easing, reflecting the cautious sentiment within the MPC.
Interest Rate Forecast Summary Table
| Date | Forecast Action | Projected Bank Rate (%) |
| August 7, 2025 | 25bps Cut Expected | 4.00 |
| September 18, 2025 | No Change or Cut | 3.75–4.00 |
| November 6, 2025 | Potential Further Cut | 3.75 |
| December 18, 2025 | Hold | 3.75 |
These forecasts are data-dependent and may shift with inflation updates or global developments.
What Do Analysts Say About a Potential Rate Cut in August 2025?
Most analysts predict a rate cut on August 7, supported by weak economic signals.
- The market is pricing in a 97% chance of a rate reduction
- Barclays expects a three-way split vote: four for a cut, two for holding, two for a deeper cut
- Some traders anticipate another cut in November 2025, likely to 3.75%
- Inflation is cooling, but still above target, adding complexity to the decision
The Monetary Policy Committee is expected to lean toward easing, though not aggressively. A modest 25bps cut would signal continued caution amid ongoing uncertainty.
Investors are focusing on the MPC vote breakdown and inflation forecasts for clues on the BoE’s future path.
Could Falling Inflation Trigger a Central Bank Interest Rate Cut?
Yes, falling inflation is one of the strongest arguments for a rate cut. When inflation trends toward the 2% target, the BoE gains more flexibility to lower rates without risking overheating the economy.
With June’s CPI reading at 3.6%, there’s progress, though slower than anticipated. However, inflation is no longer being driven by domestic demand but external factors like energy prices and global trade tensions.
The BoE is cautious not to cut too quickly, but signs suggest the rate trajectory is downward. If inflation continues easing through Q3, further cuts may follow, supporting borrowers and softening economic headwinds.
When Will the Bank of England Likely Act on Monetary Policy?
The BoE is expected to act at the August 2025 meeting with a likely 25bps rate cut. Analysts suggest the next move after that could come in November, contingent on inflation trends and global developments.
Given the BoE’s stated approach of gradual and data-driven changes, rapid cuts are unlikely unless economic conditions deteriorate faster than expected.
The Monetary Policy Committee prefers to wait for strong evidence before taking further steps. Recent labour market weakness, easing inflation, and geopolitical risks may justify further easing by year-end.
However, if inflation remains sticky or energy prices rise again, the committee could pause after the August cut to reassess.
What Role Does the Monetary Policy Committee Play in Interest Rate Decisions?
The Monetary Policy Committee (MPC) sets the Bank Rate to help control inflation and support the UK economy. It includes nine members who meet regularly to decide whether to raise, lower, or hold interest rates.
Key roles of the MPC include:
- Evaluating economic trends: inflation, unemployment, GDP
- Balancing growth and price stability
- Considering global economic developments
- Publishing minutes to ensure transparency
- Issuing inflation and growth forecasts
Each member casts one vote, and decisions are based on a majority. For example, in June 2025, the vote was 6–3, showing mixed views on rate cuts. The MPC’s guidance also shapes market expectations before any rate change.
How Can the Public Stay Informed About Future Rate Decisions?
The Bank of England publishes a detailed schedule of its MPC meetings on its website, allowing the public and investors to plan around key dates. Interest rate decisions are usually released at 12:00 noon UK time, accompanied by statements and press conferences.
Individuals can stay informed through:
- BoE’s official reports and inflation briefings
- Economic calendars from trusted financial portals
- Take-home pay calculators that model the effects of interest rate changes
- News outlets covering MPC announcements and expert analysis
Understanding the timing and rationale behind decisions helps households and businesses make better financial choices. Whether it’s budgeting for mortgages or adjusting investment strategies, staying updated is essential in today’s volatile environment.
Why Does the £100 Bank of England Note Matter in This Discussion?
While not directly tied to interest rate policy, the £100 note symbolises trust and stability in the UK’s monetary system. In times of financial uncertainty, the credibility of currency becomes vital.
Relevance of the £100 note:
- Represents central bank confidence in the economy
- Used as a store of value during turbulent financial periods
- Signals long-term policy reliability to the public and markets
When the Bank of England acts decisively and transparently, it strengthens public trust in both its decisions and currency. Interest rate changes impact inflation, spending, and the value of the pound, including high-denomination notes like the £100 bill.
These notes reflect economic stability, and their usage can shift with inflation or confidence levels, highlighting the BoE’s role in maintaining steady monetary policy.
Conclusion – Will the Bank of England Cut Interest Rates?
The Bank of England is widely expected to reduce interest rates at its upcoming meeting on August 7, 2025, lowering the base rate from 4.25% to 4.00%. This move reflects mounting concerns over economic slowdown and a steady decline in inflation.
However, any additional cuts will depend on evolving economic data and global influences. The Monetary Policy Committee remains focused on a cautious, evidence-based approach. For households and businesses, understanding these shifts is vital.
As rate cuts loom, borrowing, saving, and investing in the UK could all be significantly affected in the months ahead.
