How Far will Interest Rates fall in 2025

A look at the forecast and outlook for interest rates in the coming months and next year in 2025. Case for and against further rate cuts.

0:00 Why Rates were cut
1:48 Case for Higher Rates
3:44 Case for Lower Rates
5:53 Predictions for 2025

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[jamesgeorge]

What shocks me is that a nation of wage slaves has just taken a rough 25% loss to their standard of living/wealth and there is no real recognition of it, just talking heads going on about a reduction in inflation etc. as a nation we have taken a massive step down in our quality of life and it's all "keep calm and carry on" wank. The UK is entering 'developing' nation status.

[austinbar]

Sadly with each passing day we can see the impact this awful policy has had on the UK. Tied up in red tape and tariffs with lower GDP than before the pandemic whilst the others in the G7, including Italy, are above. The lower GDP means we do not have the headroom to pay our way in the world and must resort to borrowing.Whilst there are rich people in the UK; a great many of us are poor and now we are poorer still. What steps can we take to generate more income during quantitative adjustment?

[DavinderPanesar]

I believe the IMF found that in nearly all historical data there was no link between wage growth and inflation. Inflation occurs when Main Street issue currency. That's exactly what inflation is, the printing of currency.

[theolddog]

The ideal situation will be for interest rates to fall to 3.0% to 3.5% in the next 2 years, settle at that level for a few years and then rise slowly to 4.0% to 4.5% over a few years. Anything lower will simply lead to house price inflation once again and lack of affordability.

[lovefootball]

Dont get your hopes up and risk devaluation of the £ if the UK cuts rate any further and the US fed keep rate high as we risk importing inflation due to a fall in purchasing power of the pounds

[hungo]

Despite subsiding a bit, inflation still lingers and prices haven't abated enough in the UK. The economic outlook of the UK might still be dismal in the next few years as wage rises are sluggish and miniscule.

[erongi]

A case can be made that interest rates at their "natural" rate historically around 5% have encouraged productivity and ultra low interest rates the opposite. If you have a crappy project which is not very profitable it may still go ahead if interest rates are next to zero. If interest rates are much higher the poor return project will not go ahead. Combined with zombies who only stay in business if borrowing costs are low because they are inefficient then higher interest rates maybe desirable for economic health.

[cobbler]

From my recollections of previous labour governments is they would take money off you every budget. Gordon Brown was very good at it. They take money from those who have worked hard and saved to enjoy a better life and give it to those who have not.

[donelson]

What we need is a rollback of inflation to counteract the high prices that we have now.

[turingtrading]

You have a greater understanding than the latest resident in Number 11..

[andrewharris]

Reserve bank shouldn’t be controlling interest rates. They should only intervene in the case of an emergency and allow the market to find the natural rate.

[andrewtaylor]

Interest rates should be around 6% for a stable economy, why the hell they dropped so low just emphasises how screwed the economy is!
For those who've had a mortgage for over 10 years should be laughing all the way to the bank, with all that cash saved & stashed away as long as they didn't spend it on lavish holidays & silly lease car deals!!
Slow & steady house price declines for years to come, but many crapping themselves in the knowledge they're asset is slowly being eroded away.
In short, a recession on its way - if not a depression.

[terryj]

What makes me laugh is that people think a rate fall is the answer all this will do is force house prices up more. You need to keep rates up. People need to learn to live within their means. You need to build more homes not put down rates.

[Ned-sr]

Nothing to do with labour or Rachel reeves

[lucacivalentin]

Hi...a quick question...where to you see the interest rates in 2 years time???...the actual rate that people borrow. Thx

[AhuraMazda]

Normal interest rate should be 2% so this will feed growth and our children can get a job when they reach their age. High interest rates makes rich more richer and poor more poorer. Also high interest rates signs of undeveloped countries.

[ebuka]

The UK economy is composed of 80% service sector. This service sector inflation currently stands at 5.7%, but total inflation for the economy is 2%. Has somebody given primary, secondary and tertiary sectors inflation equal weighting in calculating the overall inflation figures? Can 80% of your overall economy experience inflation of 5.7% and then the overall economy inflation is 2%?

[graemejones]

Near enough zero, I called it early in the year and I still see a fiscal liquidity event returning rates rapidly to or close to 0%

[AdamWebb]

People have got to use to such stupidly low interest rates. It should have never been that low to begin with.

[drscopeify]

We in the west have made an error, when rates and inflation hit bottom in 2008 and failed to return back to normal levels, we should have issued policies to create more inflation in a beneficial away. Issue policies to boost a rise in construction, de-regulation and land usage, or issue industrial policies and tariffs to replace a few cheap imports with higher cost local manufacturing, maybe in Green energy, cars, electronics, and so on.

By failing to do so, we have ballooned the highly inefficient value of housing that does very little to benefit the population other than raise inequality. The problem with industrial polices is that you distort the free market but this might be the future of the world we live in so might as well start small and see how it plays out.