Bank of England Base Rate Cut - when will it happen?

The Bank of England has signalled that more than one interest rate cut is likely this year - but the question is, when?

Governor Andrew Bailey told the Financial Times that rate cuts were “in play” at future meetings of the Bank’s Monetary Policy Committee, while major central banks including the Federal Reserve and European Central Bank have put summer interest rate reductions on the agenda.  

The Bank has recently held UK rates at 5.25 per cent so speculation is growing about when, rather than if, a cut will come.

Brokers have given financial service Newspage their views.

Stephen Perkins, managing director at Yellow Brick Mortgages: "Despite all the positive signs around inflation and a more dovish Monetary Policy Committee, when the chips are down the Bank of England could still be slow to react. Threadneedle Street generally looks across the pond to the US Federal Reserve to lead the way. With 8 votes for a hold and only a solitary voice in the rate reduction choir, we could get a cut in May but this could be too little too late for many households and businesses already on the brink."

Lewis Shaw, owner and mortgage expert at Shaw Financial Services: "If we don't get a base rate cut in May due to the Bank of England slavishly following the Fed, we'll see a bad economic situation get worse. Unfortunately, I can't see it coming before June as the talking heads continue to sit in their ivory towers, pontificating about data rather than walking through a market town to see the disastrous fruits of their labour."

Katy Eatenton, mortgage & protection specialist at Lifetime Wealth Management: "We needed a rate cut [last time’ but I don’t envisage one until mid to late summer unfortunately, despite the dovish narrative emerging from Threadneedle Street."

Rob Gill, managing director at Altura Mortgages Finance commented: "The first cut in the base rate seems set to come as soon as May. With the US Fed indicating three rate cuts this year, our weaker economy could see four delivered, taking the base rate down to 4.25%."

Ross McMillan, owner/mortgage advisor at Blue Fish Mortgage Solutions: "Common sense and various sustained economic data would suggest that the next opportunity in May to cut rates should be grasped with gusto. You can't always get what you want, though, and with Andrew Bailey and his cautious cohorts at the helm, it sadly appears more likely that we may not get what the UK economy and beleaguered borrowers desperately need until we are deep into the Summer."

Richard Thompson, director at Abbeydale Mortgages: "I expect a reduction of 0.25% in the base rate at the next meeting in May. This projection is largely influenced by the recent decline in swap rates and the notable drop in inflation to 3.4% in March. I firmly believe a cut is needed not just to alleviate the pain of borrowers but to stimulate consumer spending on the high street. Looking ahead, I am optimistic about the possibility of a continued decrease in inflation next month. Should this materialise, it will undoubtedly exert considerable pressure on the Bank of England to implement a base rate reduction."

Craig Fish, director at Lodestone Mortgages & Protection: "The next rate cut should come in June, if the decision makers in Threadneedle street want to retain what little remaining credibility they have. For once they need to put on their big boy pants and make a decision for the good of the UK, and stop playing follow the leader with the Fed. To delay the decision to cut could be the final nail in the coffin for the UK economy."

Justin Moy, managing director at EHF Mortgages: "We will have to wait a little longer for a base rate cut. The Bank of England are conceding possession and will only be brave to break once the US Fed make their move. June fits that plan, but the positivity should start now, with fixed rates reversing and starting to reduce over the coming days. The words spoke much louder than the unchanged base rate decision, and markets should react with some Easter cheer."

Gary Bush, financial adviser at MortgageShop: "Oh, what it must be like to sit at the top of the Bank of England like an emperor, see the country burning all around him, and make teasing comments like 'rate cuts are ‘in play’. Andrew Bailey has shocked me since taking up the reins at the Bank of England, demonstrating a clear lack of understanding of how the population of the UK is feeling in their pockets. The focus shouldn't be solely government targets, there needs to be an understanding of taxpayers suffering. We need confidence to return and a cut in rates of at least 0.25% on 9th May is what any sane person would vote for."

Gareth Davies, director at South Coast Mortgage Services: "Despite all the data still pointing towards the need for a base rate cut, most notably this morning's retail sales stagnating, I’m convinced the Bank of England still won’t make a move until our cousins over the pond do. It's June at the earliest for me."

Samuel Mather-Holgate, independent financial advisor at Mather and Murray Financial: "Members of the Bank’s Monetary Policy Committee seem completely unable to see the pain being inflicted on homeowners and businesses by higher rates. They are obsessed with inflation and getting it down. The first rate cut won’t come until August, at the next big meeting. When cuts do arrive, they might come quick as they also won’t want to suck deflation. They risk is a yo-yo effect as the bank is so backwards-looking that they don’t anticipate, which leads to over-corrections in policy."