Will the Bank of England cut interest rates tomorrow? Experts share their predictions and analysis

As the Bank of England’s MPC prepares to announce its latest interest rate decision on Thursday, financial advisers and investors are bracing for guidance that could shape client portfolios and household finances in the months ahead.

In December, the decision was to cut interest rates to 3.75%. However, with inflation remaining sticky, the labour market evolving, and global uncertainties persisting, all eyes will be on Threadneedle Street to see whether the Bank opts to hold rates or signal a shift in policy this time around.

Ahead of the decision, we’ve gathered expert insights from leading strategists and market practitioners, covering the potential implications for investments, mortgage borrowers, and savers. From cautious forward guidance to opportunities in UK property and interest-rate-sensitive assets, these perspectives provide a snapshot of the landscape advisers need to navigate.

For the latest analysis and reaction once the Bank of England’s decision is made, check back here with us on IFA Magazine tomorrow after midday for all the news and views from across the industry.

Commenting ahead of the upcoming Bank of England interest rate decision on Thursday, Charlie Ambler, Co-Chief Investment Officer, Partner at wealth management firm Saltus, said: “Having cut the base rate to its lowest level in almost three years in December, the Bank of England now finds itself in a more delicate phase of the easing cycle. Progress on services inflation and wage growth remains key, and with headline inflation ticking higher last month, the consensus expectation is that rates will be held at 3.75% this week.

“Short term fluctuations in inflation data are unlikely to alter the broader direction of travel, but the Bank will be keen to reinforce its commitment to a gradual and measured approach to rate cuts. The full disinflationary impact of the tax measures announced in the Autumn Budget has yet to feed through, which means policymakers are likely to strike a cautious tone in their forward guidance. How confident the Bank sounds that inflationary pressures are being brought under control will be closely watched by markets.

“For investors, the backdrop remains one of uncertainty. Persistent inflation pressures and ongoing geopolitical risks continue to shape asset allocation decisions, reflected in sustained demand for both gold and government bonds. In this environment, the focus should remain firmly on quality and resilience, with disciplined portfolio construction and selective exposure to interest-rate-sensitive areas and UK equities where valuations remain compelling.”

Peter Goves, Head of Developed Market Debt Sovereign Research of MFS Investment Management said: “The Bank of England is highly likely to keep its policy rate on hold at 3.75% on Thursday. The MPC is likely to remain divided and cautious. Data isn’t convincing enough to lurch the committee one way or another. The labour market is loosening, pay growth is falling from elevated levels and growth saw some rebound in the last print. That said, we think the demand outlook remains somewhat subdued and the BoE is highly likely to lower its near term inflation path (partly on the back of government measures in the budget). We therefore think more cuts are coming (unlike the ECB) which keeps us constructive on the front-end of the curve. The long-end is another matter – more exposed to politics and we are mindful of the upcoming by-election and broader local elections in May which could see further challengers to Starmer’s leadership.” 

In terms of what tomorrow’s decision might mean for mortgage and property markets, Aaron Shinwell, Chief Lending Officer at Nottingham Building Society, said:   

“Mortgage rates are now at their lowest levels since 2022, creating real opportunities for anyone looking to buy or remortgage. Although a rate cut this month looks unlikely, rates have already passed their peak and could gradually edge down over time, which good news for the 1.8 million borrowers expected to remortgage this year and first-time buyers finding a more realistic route onto the property ladder.”  

“For those still saving towards a deposit, a hold on the base rate provides some stability. Savings rates remain competitive for now, giving people a chance to build their deposit while keeping a close eye on how both savings and mortgage rates change. As rates do ease, that combination of a stronger deposit and lower borrowing costs could make a meaningful difference to affordability.   

“Small shifts in expectations around future base rate reductions are already influencing mortgage pricing and we anticipate modest downward movements in rates through 2026, which should help support demand. ” 

With most analysts predicting a ‘hold’ decision from the MPC, Maike Currie, VP of Personal Finance at PensionBee, commented: “It’s a big week for central banks, with interest rate decisions from the Bank of England and the European Central Bank, alongside fresh scrutiny of the US Federal Reserve following last week’s nomination announcement of a new Fed Chair. Investors will be keeping a close eye on the US central bank, as any rate cuts below 3% could raise concerns about a potential policy misstep, with risks of having to reverse course quickly if inflation doesn’t get down to target without a growth slowdown.

“The Fed’s next steps will matter to global markets; however, for UK households and their personal finances, the focus this week will be firmly on what the Bank of England decides to do with UK interest rates.

“While interest rates in the UK have started to come down, the path ahead is far from clear. Inflation remains sticky, with the cost of food particularly weighing on household finances. Rising global agricultural commodity prices, combined with higher domestic labour costs – including the impact of the National Living Wage increase – and heightened global uncertainty, make back-to-back rate cuts unlikely in the near term.

“Policymakers will be proceeding with caution. Further cuts may come later this year, but expect these to be gradual and highly dependent on how inflation, the labour market and growth of the economy evolve.”