The Bank of England’s decision before the end of the month, and the Labour Party government’s Spring Budget on March 26, could be “particularly painful”
Millions of UK households have been warned a “nasty shock” looms next week – as an interest rate decision is made. But the Bank of England’s decision before the end of the month, and the Labour Party government’s Spring Budget on March 26, could be “particularly painful”
The next Bank of England interest rate decision will be announced on Thursday, March 20, 2025. Experts warn the impact could be “particularly painful” for high-earning families with substantial existing mortgage commitments.
The latest Bank of England Inflation Attitudes Survey found the public estimated inflation at 4.9 per cent in February, while official figures put the real figure at 3 per cent in the most recent data, which was for January.
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Survey respondents expect inflation of 3.2 per cent over the next year, even though the Bank itself has forecast a rise of 3.7 per cent. A third said they expected rates to rise over the next 12 months, slightly up in November 2024.
Just under one in four expected rates to stay about the same over the next twelve months, up from 22 per cent in November 2024, and 29 per cent expected rates to fall over the next 12 months, down from 34 per cent in November 2024.
Hargreaves Lansdown head of personal finance Sarah Coles says: “People tend to over-estimate how high inflation is and underestimate how low interest rates are on savings and borrowing.
“It’s not a huge shock: they have busy lives and keeping on top of these things isn’t a huge priority. However, if you’re too far off, you could be in for a nasty surprise. When asked to guess what inflation was in February, they knew inflation had fallen, just not how far.
“Meanwhile, when asked to estimate what’s happening with savings and mortgage rates, they assume rates have risen – when in reality, they have actually fallen a little.”