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Bank Rate in United Kingdom
The Bank of England's policy rate from 2013 to 2022 was initially maintained at historically low levels to support post-financial crisis recovery. The rates saw a gradual increase pre-pandemic but were slashed to near-zero in 2020 to mitigate the economic impact of COVID-19. As the UK economy started recovering in 2021-2022, and inflationary pressures mounted, the Bank began increasing rates to control rising inflation.
The Bank Rate ended 2022 at 3.50%, up with the 0.25% end-2021 value and above the reading of 0.50% a decade earlier. For reference, the average Bank Rate in Major Economies was 3.50% at the end of 2022. For more interest rate information, visit our dedicated page.
United Kingdom Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for United Kingdom from 2014 to 2023.
Source: Macrobond.
United Kingdom Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Bank Rate (%, eop) | 0.75 | 0.10 | 0.25 | 3.50 | 5.25 |
| SONIA Rate (%, eop) | 0.71 | 0.04 | 0.19 | 3.43 | 5.19 |
| 10-Year Gilt Yield (%, eop) | 0.82 | 0.20 | 0.97 | 3.67 | 3.54 |
Central Bank decreases rates in November
Latest bank decision: At its meeting ending on 6 November, the Monetary Policy Committee (MPC) voted by a large majority to reduce the Bank Rate by 0.25% points to 4.75%, with one member preferring to maintain the Bank Rate at 5.00%. This took rate cuts so far this year to 50 basis points.
Monetary policy drivers: The key domestic factors influencing the Central Bank's decision were disinflation, softening wage growth and a loosening labor market. Regarding inflation, it was below the Central Bank’s 2.0% target in September, though the Bank judged it would rise about target in Q4 due to a more challenging base of comparison.
Policy outlook: The Central Bank stated that it would take a gradual approach to monetary easing going forward. Our Consensus is for over 100 basis points of further rate cuts by end-2025, with a forecast spread of 175 basis points.
Panelist insight: On the outlook, ING’s James Smith said: “A December rate cut, we think, now looks unlikely. Previously we’d thought that the Bank would accelerate its cutting cycle beyond today, but uncertainty surrounding the budget’s impact has changed our mind on that. […] Our view is that rate cuts will be cut at every meeting from February until rates reach 3.25% next autumn.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects British interest rate projections for the next ten years from a panel of 41 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for British interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our British interest rate projections.
Want to get access to the full dataset of British interest rate forecasts? Send an email to info@focus-economics.com.
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