Relief for struggling Brits with Bank of England poised to cut interest rates TODAY in bid to kick-start stalling economy

Daily Mail​

08-05-2025

Struggling Brits are set for relief today with the Bank of England poised to cut interest rates.
The Monetary Policy Committee is widely expected to reduce the level from 4.5 per cent in its latest decision just after noon.
Most economists are predicting a quarter point fall - but others believe there could be a bigger move as alarm at the stalling economy outweighs short-term inflation pressures.
It is the first time the MPC has acted since Donald Trump threw the world into chaos with his so-called 'Liberation Day' tariff announcements last month.
Since then stock markets have crashed and global growth forecasts have been downgraded - throwing Labour's spending plans into turmoil.
Rachel Reeves has been warned she faces a £60billion black hole in the government's books, with fears of more tax hikes or spending cuts this Autumn.
Ministers have been talking up the benefit to Brits of interest rates coming down, easing the stress on mortgage payers. Wage rises are also running higher than inflation.
The anticipated announcement of a Transatlantic trade pact this afternoon could offer another glimmer of hope for Keir Starmer, coming after a wide-ranging deal was struck with India earlier this week.
Threadneedle Street's decision, along with quarterly economic forecasts, will be delayed by two minutes due to the silence marking 80 years since VE Day.
Kallum Pickering, chief economist for Peel Hunt, said the 'highly uncertain economic backdrop' would encourage policymakers to intervene by cutting rates on Thursday.
'Although UK economic momentum has picked up appreciably since last December, and has surprised to the upside relative to depressed Bank expectations, rising global growth worries linked to the US's erratic and risky tariff policies pose fresh risks,' he said.
Economists will be paying close attention to the MPC's forecasts for inflation and economic growth, which some said could both be downgraded.
This could 'provide a strong signal that policymakers are prepared to step up the pace of future rate cuts' in order to boost the economy, according to Mr Pickering.
Laith Khalaf, head of investment analysis at AJ Bell, said tariffs had caused a 'massive reappraisal of the future path of UK interest rates'.
'As things stand, markets are focusing on the collateral damage to the UK economy rather than the potential for a trade war to ignite inflation once again,' he said.
'The effects of trade tariffs, once imposed, are highly unpredictable and could unleash both inflationary and deflationary forces.'
Sandra Horsfield, an economist for Investec, said it is a 'near-certainty' that the Bank will reduce borrowing costs, with most participants in the financial markets pricing in a rate cut.
'The new question now though for the MPC to consider is how the US trade policy shifts have changed the outlook for UK inflation,' Ms Horsfield said.
'What makes this month's decision easy is that virtually everything has pointed in the direction of lower UK inflation pressure.'
Inflation has fallen in recent months, which is likely to indicate to policymakers that interest rates – which are used as a tool to control inflation – can continue to come down.
Headline CPI inflation slowed to 2.6 per cent in March, from 2.8% in February, according to the latest official data.
Crucially the rate of services inflation – a metric closely watched by the Bank of England – fell to 4.7 per cent from 5 per cent.
There is speculation that countries such as China will respond to US tariffs by re-routing exports, potentially resulting in lower prices for UK consumers.
A weaker US dollar and falling oil prices could also put downward pressure on inflation.
Europe's central bank cut interest rates last month, and said 'exceptional uncertainty' over trade policy meant future rate decisions would have to be taken on a meeting-by-meeting basis.
However, there is little sign of interest rates falling in the US soon, despite Donald Trump publicly demanding action from the US Federal Reserve.