UK interest rates may fall again later this year, but when, and by how much, remains uncertain. The Bank of England’s base rate, currently used to control inflation and guide borrowing costs, is being held cautiously as inflation slowly drifts closer to its 2% target.
In March 2025, the Consumer Prices Index (CPI) showed inflation at 2.6%, down significantly from the 11.1% peak in October 2022, but still slightly above the Bank’s comfort zone. While this suggests that rate cuts may be on the horizon, Bank of England governor Andrew Bailey has warned that any reduction will be taken “gradually and carefully” to avoid destabilising the economy.
However, global uncertainty, particularly from the economic shock caused by sweeping tariffs introduced by US President Donald Trump, could change that outlook. Analysts now suggest rates could fall to 3.5% as the Bank seeks to stimulate growth amid international trade tensions and weakening investor confidence.
In short, rate cuts are likely, but how quickly they come will depend on inflation falling further, the UK economy’s resilience, and how much damage global trade disputes inflict in the coming months.
