Picture courtesy of Wikipedia

 

Policymakers at the Bank of England are expected to reduce interest rates from 4% to 3.75%, marking the sixth adjustment since August last year. This decision, anticipated by analysts, aims to address the economic challenge of rising inflation, though it may not be unanimous among the nine-member Monetary Policy Committee (MPC).

 

The Bank rate significantly affects borrowing costs for consumers and interest returns for savers. Current intentions align with the MPC's objective to maintain inflation at 2%. With a recent drop in the Consumer Prices Index (CPI) to 3.2% in November, down from 3.6% in October, the committee might lean towards a rate cut to tackle persisting economic stagnation and increasing unemployment.

 

During the last MPC meeting, a narrow decision was made to maintain rates, with Governor Andrew Bailey advocating a wait-and-see approach. However, the current inflation dip gives confidence to analysts like James Smith from ING, who sees the current drop as a "green light" for a rate cut. Smith also predicts additional reductions in February and April next year, though not all experts concur.

 

A reduction in the Bank rate directly impacts mortgage holders; approximately 500,000 homeowners with tracker mortgages could see a decrease of about 1,245 Thai baht in monthly repayments. Similarly, homeowners on standard variable rates may experience savings of around 601 Thai baht per month, provided banks pass on the cuts. Despite the relief for borrowers, savers might face diminished returns, with current easy-access savings account rates averaging 2.56%.

 

 

Key Takeaways:

• Bank of England expected to cut interest rates to 3.75%.
• Recent CPI inflation drop to 3.2% influences MPC's decision.
• Borrowers may benefit from reduced rates; savers are likely to see lower returns.

 

  Adapted by ASEAN Now from BBC 2025-12-18

 

 

 

So this will weaken, the already week 'pound'? Making the exchange rate even worse to the Thai Baht?

1 minute ago, mikeymike100 said:

So this will weaken, the already week 'pound'? Making the exchange rate even worse to the Thai Baht?

 

 

I would say that the Baht is strong rather than GBP "weak" (look at USD/EUR rates) and, yes, lower rates should weaken the Pound....but, in true market style, GBP/THB has edged back over 42.

1 minute ago, mikeymike100 said:

So this will weaken, the already week 'pound'? Making the exchange rate even worse to the Thai Baht?

 

You would think so. 

 

But most (working) Brits are struggling to put food on the table let alone take holidays. They have to pay for all the workshy with 5 kids, not to mention the immigrant hotels.

 

Unfortunately, even at home they will still suffer with the price of imports being more expensive.

 

Two Tear Reeves budget for recession having the desired effect.  

 

https://news.sky.com/story/economy-shrinks-by-0-1-in-october-official-figures-show-13482426