Bank of England keeps interest rate at 4.25% - June 2025

On June 19, 2025, the Bank of England’s Monetary Policy Committee (MPC) announced that it will maintain the bank rate at 4.25%, voted by majority. Three members supported a 0.25 percentage point cut.

Why interest rates remain unchanged

• Labour market shows weakness: The BoE flagged a notable decline in employment and payroll data, leading to softer wage growth

• Inflation still too high: In May, inflation was around 3.4%, significantly above the 2% target. The BoE expects it to peak at about 3.7% in September

• External pressures: Rising energy costs tied to the Middle East conflict and trade uncertainties-including U.S. tariffs-pose upside risks to inflation

Outlook & future moves

• Gradual rate path: The BoE emphasised that any future cuts will be "gradual and careful," rather than following a preset timeline

• Market expectations: Analysts expect the next cut as soon as August, with forecasts targeting around 3.75% by year-end

• Economic growth is modest: Q2 GDP is estimated at about 0.25%, up from April’s dip, but underlying momentum remains weak.

What this means for you

• Borrowers & mortgage holders: No immediate relief on rates, but fixed-rate mortgage offers may respond ahead of future cuts.

• Savers: Interest on savings could hold steady in the short term.

• Businesses & employers: With signs of weak labour market, wage demands may ease-something employers should monitor.

  
  

Source: Bank Of England