Bank ‘unlikely’ to cut interest rates but decision a close call, experts say

Sarah Coles, head of personal finance at Hargreaves Lansdown: “We’re not out of the woods yet on inflation, but the fact it held steady in September indicates that we’re not headed any deeper into the undergrowth either.

“It doesn’t change the fact the Monetary Policy Committee is highly likely to leave rates on hold next week, but it may mean cuts actually kick in before the end of the year.

“Since the Bank of England started cutting rates in August 2024, a hold next week would mean this is the first quarter where it hasn’t done so, but inflation at 3.8 per cent means it can’t be in too much of a hurry.

“It’s expecting inflation to fall in the coming months, at which point cuts could be on the cards.

“The Bank won’t want to drag its feet, given the weakness creeping into the employment market and the fact that growth has been so sluggish.

“It’s why the market was so quick to respond to lower-than-expected inflation figures, pricing in a cut as early as December.

“However, this is far from a foregone conclusion and there’s still a decent chance it may not happen until early 2026.

“The bad news for savers is that average fixed rates have already fallen very slightly.

“The good news is that the most competitive deals are still holding up well – offering almost 4.5 per cent for shorter fixes and slightly more for longer ones.

“The even better news is that the level of competition in the easy access market means you can still get 4.5 per cent (including a 12-month bonus).

“These competitive deals are available from online banks and savings platforms, so it’s well worth checking out what’s on offer if you haven’t switched for a while.

“In an environment of falling rates, we don’t know how long easy access will stay at this level, so if you have a portion of savings you won’t need for a period, it’s still worth considering a fixed rate deal.

“There’s good news on fixed rate mortgages, which didn’t wait for a rate cut. A number of the major lenders have already reduced their rates to reflect expectations that we’ll get a cut sooner rather than later.

“These haven’t been spectacular moves, but every time the market inches lower, it supports more buyers and people with a remortgage looming.

“It means it’s worth keeping your eye out for the very best rates if you need to remortgage. The process has been a nightmare ever since rates started rising in 2022.

“In fact, the latest HL Savings and Resilience Barometer shows that those who have remortgaged pay £88 more a month than those who haven’t and have almost three times as much of their borrowing on variable rates.

“It means even if you can shave a fraction of a percent off your mortgage rate, it will make a real difference.”