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Could the Bank of England cut the base rate this year?

Journalist: Jake Carter, Mortgage Introducer

ended 17. February 2023

A senior Bank of England policymaker has said interest rates may need to be cut this year as the pressure on households from high borrowing costs ripples through the market.

When do you believe the Bank of England will cut the base rate?

What impact will this have on the market once they do?

Do you believe a reduction to the base rate is necessary? If so, why?

4 responses from the Newspage community

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Samuel Mather-HolgateVerified
Independent Financial Adviser at Mather and Murray Financial
If the Bank doesn't cut rates this year the whole system needs to be reinvented. Inflation is set to be back to target, if not below, by the end of the summer. The economy will be in the bin at the same time, unemployment will be rising and homeowners won't be able to afford to eat. Rate cuts are coming, a lot of them, just not fat enough for the general public. The central bank is out of touch with the wider population but also with the economic reality of the situation. They cannot see the obvious repercussions of their inaction.
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Graham CoxVerified
Director at Bridging Hub
Barring something unexpected, inflation is almost guaranteed to plummet this year, as the effects of last year's energy hikes fall off the year-on-year figures.

As increasing numbers of borrowers remortgage onto much higher interest rates this year, the disastrous consequences of ever-rising house prices will play out in full view. The pressure on the Bank of England to cut base rates will be enormous. For that reason I think we'll see a rate cut in late spring or early summer, and possibly two or three cuts before the year end.
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Amit PatelVerified
Adviser at Trinity Finance
Higher borrowing costs impact the whole economy from mortgage holders to small and medium-sized businesses. With inflation expected to fall over the coming months, the BoE must take corrective action and reduce the base rate. The longer the cost of borrowing remains expensive the more detriment it will have on smaller businesses which are the lifeblood of the economy.

My hunch is the rate will be cut in September at the earliest.
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Samuel Ewen0
Managing Director at Rosehill Financial Services
I think we’ll see a sharper decrease in inflation over the next few months, as more and more borrowers remortgage at higher rates, along with eye-watering household bills and businesses facing increased running costs. There are also new property purchases to take into account – the data regarding the impacts of increasing rates for new purchase transactions will naturally lag, as completions do not happen overnight.

That said, although we may see another increase in the Base Rate in March, I think that the Bank of England will soon be under increasing pressure to reduce the Base Rate.

Personally, I think we could potentially see Base Rate reductions from late 2023, once new data filters through regarding the impacts on inflation. However, after the curveballs we’ve seen over the past year, it’s anyone’s guess.