Interest rates live updates: Bank of England cuts base rate after shock inflation drop

Economists expect that the Bank of England’s nine-member Monetary Policy Committee will vote in favour of a cut, after voting five to four in favour of the most recent cut in August.

A Bloomberg survey found economists expect the vote will be split eight to one this time, with Catherine Mann expected to be the only hawk opposing a cut.

The UK will make “strong representations” to Donald Trump about plans for tariffs which could hit British economic growth, and will use the months before Mr Trump’s inauguration in January to “prepare for different eventualities”, Rachel Reeves has said.

The chancellor added that she is not “sanguine” about the president-elect’s plans, but is “optimistic” about the UK’s ability to shape the global economic agenda.

Mr Trump has said he wants to increase tariffs on goods imported from around the world by 10%, rising to 60 per cent on goods from China, as part of his plan to protect US industry.

Higher US import tariffs would reduce global economic growth by about one percentage point over the next two years, according to analysis from the National Institute of Economic and Social Research (Niesr).

For the UK, Niesr estimates economic growth would slow to 0.4 per cent in 2025, down from a forecast of 1.2 per cent.

Inflation falling below the Bank of England’s 2 per cent target level will encourage policymakers to continue easing interest rates, experts believe.

Andrew Goodwin, chief UK economist for Oxford Economics, said the outcome of the Bank’s Monetary Policy Committee meeting “looks virtually certain”, although some members could still opt for rates to be kept the same.

MPC members Huw Pill and Megan Greene are the most “unpredictable”, he said, with lingering concerns over services sector inflation and wage growth.

UK borrowing costs are set to be cut for the second time this year, despite tax changes and a Donald Trump victory in the US casting uncertainty over the future path of interest rates.

Most economists think policymakers at the Bank of England will opt to reduce interest rates to 4.75% on Thursday.

Rates currently sit at 5 per cent after being cut by 0.25 points in August, the first reduction since 2020, then kept the same in September.

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Average UK house price a record high last month, with the cost of a home averaging just below £294,000, according to an index.

House prices increased by 0.2 per cent in October, marking the fourth monthly increase in a row, Halifax reported.

The average house price was £293,999, surpassing a previous peak in June 2022.

Property values increased by 3.9 pe rcent annually, slowing from a 4.6 per cent increase in September.

The pound was up slightly against the US dollar as of 10am, sitting at $1.2913 compared to $1.2890 at the previous close.

The euro at 10am was £0.8325 compared to £0.8325 at the previous close.

Sweden's central bank has cut its key interest rate today to 2.75 per cent from 3.25 per cent, as expected, while the Norwegian central bank held its policy interest rate unchanged at a 16-year high of 4.5 per cent.

What will Keir Starmer be most worried about as he contemplates a second Donald Trump presidency? Until recently, Ukraine has been top of the UK government’s list, given the prospect Trump might unilaterally try to end the war – and not necessarily on terms favourable to Ukraine.

However, it is now dawning on UK ministers that Trump’s threat to impose 60 per cent tariffs on imports from China and 10 or 20 per cent on those from everywhere else including the UK, could inflict huge damage on the British economy. There are growing fears the UK’s trade with its biggest single export market in the US will be hit hard.

Read the full analysis by our columnist Andrew Grice here:

Analysis from ING has warned that Trump’s victory in the US could make “Europe’s worst economic nightmare comes true” as the president-elect looks to introduce a 10 per cent tariff on all non-US goods.

Researchers from the Dutch investment bank wrote: “A looming new trade war could push the eurozone economy from sluggish growth into a full-blown recession. The already struggling German economy, which heavily relies on trade with the US, would be particularly hard hit by tariffs on European automotives.

“Additionally, uncertainty about Trump’s stance on Ukraine and NATO could undermine the recently stabilised economic confidence indicators across the eurozone. Even though tariffs might not impact Europe until late 2025, the renewed uncertainty and trade war fears could drive the eurozone economy into recession at the turn of the year.”

Several British companies have warned of rising costs to consumers in the wake of Labour’s Budget.

Business leaders from Marks and Spencer, Wetherspoon and Persimmon all join a growing list of bosses who have expressed concern.

Marks and Spencer’s Stuart Machin said the retailer is expecting to take a £60 million hit due to the “double whammy” of rises to employer national insurance contributions and the national living wage.

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