The Bank of England's Monetary Policy Committee has spent two years fighting the worst inflation shock in a generation. With that battle largely won, attention turns to the pace of rate normalisation.
Where Rates Are Heading
The market consensus suggests base rate will fall to around 3.5% by end 2026 — but the path will not be linear. Each MPC meeting will be data-dependent.
What This Means for Savers
Savers who locked in high fixed-rate bonds in 2023-24 are sitting on excellent returns. The window for those rates is closing.
What This Means for Borrowers
Mortgage rates are beginning to fall, providing relief to the millions of homeowners who refinanced at elevated rates.
Investment Implications
Falling rates are generally positive for bonds and growth equities. The key risk is that inflation re-accelerates — forcing the Bank to pause or reverse its easing cycle.
