Interest rates LIVE: Bank of England updates as base rate announcement delayed today

The Bank of England's base rate dictates how much interest you pay when you borrow money, so mortgages and credit card rates usually get more expensive when it goes up

The Bank of England is expected to cut interest rates today in what will be welcome boost for millions of households. The base rate is currently set at 4.5% and most economists anticipate it will be cut to 4.25%.

In the lead up to this decision, President Trump unleashed a barrage of trade tariffs, which caused chaos across global economics.

Bank of England Governor Andrew Bailey has signalled to policymakers that they should anticipate tariffs to hit UK economic activity, and this impact is one of the key factors in today’s decision.

Financial markets are almost certain that the UK’s Central Bank will announce a 25 percentage point reduction, taking the base rate to 4.25%. However, some anticipate that one or two members of the MPC may vote for a more substantial 50 percentage point reduction. As it stands, markets have priced in three potential cuts to be made in 2025, up from two.

The base rate dictates how much interest you pay when you borrow money, so mortgages and credit card rates usually get more expensive when it goes up. However, savers are considered the winners when the base rate rises as you are paid more money on your savings pots.

Today’s decision will be announced two minutes later than usual at 12.02pm. The slight move from the normal 12pm is to allow for the VE Day national two-minute silence to be observed.

10:09Ruby Flanagan

Why is high inflation bad?

When inflation rises and goods get more expensive, it makes it harder for people to buy as much as they once did, as their purchasing power has fallen. For example, if last year £100 could buy you 80 items at the supermarket, this year it may only allow you to buy 70. High inflation also makes people's savings worth less.

By increasing the base rate, the idea is that people will have less money to spend, and this will push down demand for goods and services and lead to lower prices - lowering the level of inflation. Decreasing the base rate intends to do the opposite.

10:07Ruby Flanagan

The link between inflation and interest rates

The Bank of England uses the base rate to control inflation in the UK. The Consumer Price Index (CPI) measure of inflation represents how the price of goods has changed over time. When inflation rises, the cost of goods usually goes up.

For example, if something cost £1 last year but now costs £1.03, then the rate of inflation on that particular item is 3%.

When inflation is low, stable, and predictable, it helps people and businesses better plan their savings, spending, and investments. This, in turn, helps the economy grow - which is what governments always want.

The goal is to keep inflation as close to 2% as possible - so the bank will act if it is both too high or too low.

10:06Ruby Flanagan

What is the Bank of England base rate?

The Bank of England's base rate - sometimes known as the bank rate or base interest rate - has a major impact on money and finances in the UK.

This is because it influences what banks and lenders charge you to borrow money. The rate mainly affects mortgages, credit cards, and loans. When the base rate goes up it makes all of these more expensive.

However, it also impacts savings, as the rate paid on your cash pots should move in line with the base rate. This means you should earn more money through interest on your savings when the base rate is higher. Although, when it drops the amount you can earn will do down.

10:05KEY EVENT

Bank of England announcement due at 12.02pm today

Welcome to the Daily Mirror’s Bank of England live blog. Here we will be giving you the latest updates and analysis ahead of the interest rates announcement at 12.02pm. The base rate currently sits at 4.5%

The Bank of England is expected to cut interest rates a number of times this year due to the uncertainty of global economics.