The Bank of England 🏦 has reduced its central bank rate from 4.5% to 4.25% 📉, taking interest rates to their lowest in 2 years 📊.
The Bank was quick to acknowledge that further rate cuts would be slow and measured ⏳ and it wasn’t on a preset course to further cuts. Forecasts 🔍 (both from HM Treasury Consensus and the International Monetary Fund) agree that further rate cuts should be forthcoming, with another three cuts expected before year-end 📅.
There has already been a renewed flurry of activity 🔄 from mortgage lenders 🏡, with some mortgage rates dipping below 4% 📉 again. Lower interest rates will help rebalance over-stretched affordability ⚖️ in many residential markets, particularly the more expensive London 🏙️ and the South East 🌳.
Unfortunately, though, it is a double-edged sword ⚖️, with further rate cuts anticipated given the expected reduction in economic growth 📉 as trade tariffs 📦 take a toll on the growth outlook.
Inflationary pressures 💹 still persist, and some modest increase in inflation rates 📈 is expected over the rest of 2025 📆.
Source: 📊 Dataloft by PriceHubble, HM Treasury Consensus Forecasts, International Monetary Fund, Bank of England May 2025.
