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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 August
At its meeting on 1 August, the Central Bank decided to reduce the Bank Rate by 0.25 percentage points to 5.00% with a majority vote of 5-4; four members preferred to maintain the Bank Rate at 5.25%. This was the first time that rates have been cut since early 2020.
The key domestic factors influencing the Central Bank's decision were the recent falls in headline inflation, services inflation and private-sector earnings growth. In particular, headline inflation was at the Bank’s 2.0% target for the second straight month in June.
The Central Bank stated that monetary policy would need to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term had dissipated further. Our panelists see between 0–75 basis points of additional cuts later this year.
Giving his take on the outlook, ING’s James Smith said: “We suspect the data on services inflation and wage growth will improve as the year goes on, making the committee more comfortable with proceeding with at least one more cut this year. We suspect that will most likely come in November, and we think that will most likely be followed by another in December.”
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 39 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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