Interest Rate Decrease – Aug 2024

On July 31, 2024, the Bank of England's Monetary Policy Committee (MPC) voted to lower the Bank Rate from 5.25% to 5%, with a narrow majority of 5–4. In the announcement made this month, it was reported that four members of the MPC preferred to maintain the rate at 5.25%. The Bank of England's base rate influences interest rates across the UK, impacting both mortgage and savings rates. This is the first rate cut since the pandemic, following a series of increases that began in December 2021, when rates rose from 0.1% to 5.25% by August 2023.

The MPC reviews interest rates approximately every six weeks, considering the current and projected state of the economy. They also monitor market interest rates to evaluate how effectively monetary policy is being implemented.

The previous cycle of rate hikes was driven by a surge in inflation, which peaked at 11.1% in October 2022. Inflation has since eased, reaching 2.0% in June 2024—matching the MPC’s target.

The next MPC meeting's decision will be announced on 19 September.

Source: Bank Of England