Leeds Building Society react to the MPC decision

08 May 2025

Martin Temple, Economist at Leeds Building Society, reacting to the MPC decision to cut the base rate by 0.25% to 4.25%:

“The reduction in the base rate by 0.25% to 4.25% will be welcome news for those currently on a tracker mortgage product but won’t have a direct impact on other mortgage rates, as market pricing has already adjusted on the assumption that this would happen.

“For savers, the news will be less welcome. As interest rates on savings accounts fall, many customers may want to review their options and look to switch providers ahead of further expected rate cuts.

“Until there is greater clarity over how the UK economy is performing, including the potential persistence of inflation, we continue to expect members of the monetary policy committee to act in a cautious manner with respect to future decisions on interest rates. This was borne out by the split vote today – whilst the majority voted for a 0.25% reduction, two members voted to hold rates at 4.50% and another two voted for a larger, 0.50%, reduction. Markets currently expect bank base rate to be reduced by another 0.25% in August and again in November.”