Rate Cuts Fail to Save UK Households from £11 Billion Crunch

Four interest rate drops—and Brits still got poorer. The math isn’t mathing.

The Rate Cut Illusion

Central bankers slashed rates four times, but UK wallets are bleeding £11 billion anyway. Turns out, monetary policy can’t outrun inflation’s hangover.

Where’s the Relief?

Households expected breathing room. Instead, they’re choking on stagnant wages and sneaky price hikes—classic ‘financial easing’ theater.

*(Bonus jab: Another win for ‘trickle-down economics’—where the only thing trickling down is disappointment.)*

Bank of England to cut another 0.25 percentage point off the main rate

The Bank of England is expected to shave another 0.25 percentage point off its main rate, taking it to 4% this Thursday with signs of the labor market is cooling following Chancellor Rachel Reeves’ April tax increases and rising global trade tensions.

Yet inflation is at a 17-month high, running hotter than the Bank forecast in May. Governor Andrew Bailey is expected to urge caution on further easing. While energy bills and other temporary factors have driven prices up, officials fear that higher wage demands could push costs even higher.

Lower rates have cost savers nearly £5 billion in lost earnings on cash deposits, including tax-free Individual Savings Accounts as well as time and sight accounts, based on the total stock of deposits and effective rates through the last year.

Furthermore, households are paying about £6 billion more each year in interest on unsecured debts and mortgages than they were 12 months ago. In comparison, the US household debt also hit a record $18.2 trillion, based on an earlier report by Cryptopolitan.

The Bank warns more borrowers will shift onto higher rates in the coming months, estimating that a typical homeowner could pay about £1,300 extra a year in mortgage costs over the coming 2 years. Approximately 1 million people have fixed deals above today’s rates and must wait before benefiting from cheaper credit.

Since July 2024, just before the first cut, the average rate rose by about 0.2 percentage points on on the UK’s mortgage stock.

Economists expect the Bank of England to stick to its easing cycle once every quarter, taking rates to approximately 3.5% by spring, 2026.

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