What is the Bank of England’s base rate?

What is the Bank of England’s base rate?

The Bank of England’s base rate, sometimes called the Bank of England rate or simply the base rate, is the rate the Bank of England charges other lenders to borrow money. It’s used by other banks and building societies to set their own interest rates on loans such as mortgages, as well as savings accounts.

Keep an eye on the current Bank of England base rate with our Tracker.

How does the base rate affect interest rates?

When the base rate goes up, this makes borrowing more expensive for lenders, so they often raise their own interest rates in response. This is good news if you’ve got cash in the bank, as you’ll earn more interest on your savings. But it can be bad news if you want to borrow money, as it makes taking out loans for things like mortgages, cars or personal finance more expensive. On the other hand, when the base rate falls, so does the cost of borrowing, so interest rates often tend to follow suit.

See what's happening with live rates and compare mortgage deals with our Mortgage Rate Comparison tool.

What is the history of the Bank of England’s base rate?

The history of the Bank of England’s base rate goes back further than you might think. The base rate was created when the Bank of England was granted a Royal Charter by King William and Queen Mary in 1694. This charter originally stated that the bank was founded to “promote the public Good and Benefit of our People”, which at the time meant funding wars with France.

Over the centuries, the base rate has been used to cool or stimulate the economy or control inflation, in particular during uncertain times such as during wars, financial crises or pandemics.

If you look at how the base rate has changed since it was first introduced, you can see that there were some periods when the base rate stayed stable, and others when it was constantly in flux. 

For example, the highest base rate level ever recorded was in 1979 when it peaked at 17%. The lowest ever recorded level was in 2020 when it fell to 0.1% during the Coronavirus pandemic. Typically, a much more normal range for the base rate is between 4-6%.

What is the current Bank of England base rate?

The Bank of England's base rate today is 4.25%. The Bank of England's Monetary Policy Committee (MPC) who set the base rate voted to cut the base rate from 4.50% to 4.25% in their meeting in May 2025, in their second cut of the year. They will next meet on Thursday 19th June 2025 to determine whether they will cut the base rate again, hold it at 4.25% or increase it.

Why is the base rate going down?

Despite inflation increasing to 3.5% in April 2025, inflation has been cooling in previous months, but still hovering above the Bank of England's 2% target. Typically, the Bank would wait for inflation to fall before considering another base rate cut. However, the base rate could be cut sooner if the Bank of England thinks this is necessary to give the UK economy a boost following the impact caused by Trump's trade tariffs.

Keep reading: Tembo's mortgage rate and house price predictions for 2025

What’s going to happen to my mortgage costs?

If you’ve got a fixed-rate mortgage, you’re protected from interest rate rises until the end of your fixed term. If your fixed rate is set to end in the next six months, it may be wise to speak to a mortgage broker sooner rather than later. If you’re on a variable rate deal, every time the base rate rises you will likely see an immediate impact on your monthly repayments.

Learn more: What should I do when my fixed-rate mortgage ends?

How low will the base rate go?

Experts believe that the Bank of England will continue to cut the rate year this year, with some predicting just two cuts this year, and others believing rates could fall to 3.5% by early 2026.

When is the next Bank of England base rate meeting?

The Bank of England’s next base rate meeting will be held on Thursday 19th June 2025. They usually meet every six weeks, but during times of crisis they tend to meet more often.

How often does the Bank of England base rate change?

There is no hard and fast rule for how often the Bank of England’s base rate changes. The base rate will only be increased when the central Bank feels it’s necessary to do so. Some years, the base rate stays stable and barely changes, other times, like more recently, the base rate is changed each time the Bank of England meets.