Interest rate cut: the winners and losers
3 minute readPublished: Friday, May 9, 2025 at 9:50 am
The Bank of England has cut its base interest rate from 4.5% to 4.25%, a move anticipated by many but still significant for the UK economy. This reduction, a full percentage point lower than its peak last year, will impact various groups differently.
**Winners:**
* **Mortgage Payers:** Homeowners nearing the end of fixed-term mortgages and prospective buyers are likely to benefit. Those with tracker mortgages should see immediate savings.
* **Small Business Owners:** Historically, smaller businesses tend to benefit from rate cuts, often experiencing higher returns due to their greater exposure to the UK domestic economy.
**Losers:**
* **Savers:** Savers will likely see their returns shrink, making it harder to grow their savings. However, proactive savers can seek better deals from challenger banks.
* **Retired People:** Those relying on interest-bearing assets for retirement income, such as fixed-term deposits, will find their income reduced, potentially exacerbating the cost-of-living crisis. The impact is especially felt as they have less time to recover from market fluctuations.
This decision comes amidst ongoing economic uncertainty, including market volatility and the potential impact of tariffs.
BNN's Perspective:
While the rate cut offers some relief to mortgage holders and small businesses, it's a double-edged sword. The hit to savers, particularly retirees, is concerning, especially given the current economic climate. The Bank of England is walking a tightrope, trying to stimulate the economy without further squeezing those already struggling. A balanced approach, considering both the benefits and drawbacks, is crucial for navigating these uncertain times.
Keywords:
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