UK interest rates are expected to fall at their fastest pace since the 2008 financial crisis, as the Bank of England prepares to respond to mounting global economic headwinds driven by President Trump’s escalating trade war.
Economists expect the central bank to begin cutting rates next week, lowering the base rate from 4.5% to 4.25%, with predictions of as much as a one percentage point drop over the next six months. That would mark the sharpest half-year decline since 2008, when rates tumbled from 4.5% to 0.5% in response to the global financial crash.
The expected cuts come amid fears that Trump’s protectionist policies — including a baseline 10% tariff on all imports, a 145% tariff on Chinese goods, and levies on cars and metals — will hamper UK growth and threaten economic stability.
Mortgage relief and falling borrowing costs
The rate cuts are already having a knock-on effect in the mortgage market. Lenders including Barclays, HSBC, and NatWest have reduced fixed mortgage rates this week by up to 0.25 percentage points, with many two-year fixed rates now below 4%.
For homeowners with a £200,000 mortgage, this means an annual saving of around £564. The Financial Conduct Authority estimates that 1.68 million households have fixed-rate deals expiring this year.
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