The Bank of England cut interest rates on Thursday, a move that could bring relief to borrowers, businesses and tough consumers across the country.

At its latest monetary policy meeting, the central bank lowered its key interest rate from 4.5% to 4.25%, due to the background of insufficient economic growth and uncertainty over President Donald Trump.

The expectation for cuts is that inflation cooled to 2.6% in the twelve months to March (2.8% last month) especially after prices fell.

Five of the nine BOE policymakers voted in favor of the cuts, two members hoped to cut 50 benchmarks, and two members wanted to put interest rates on hold.

The uncertainty in global trade policy has intensified since the imposition of U.S. tariffs and subsequent retaliation measures, BOE said Thursday. It added, “The outlook for global growth has weakened due to this uncertainty and new tariff announcements, although the negative impact on UK growth and inflation is small.”

Many UK families and companies will appreciate your tax cuts as this will make borrowing a little cheaper. Savers get higher interest rate gains from their savings accounts and they will lose.

“Just as the response to the day-to-day is textbook – slower growth, soft housing market activity and higher savings, the response to lowering tax rates should be textbooks,” Peel Hunt’s chief economist Kallum Pickering told CNBC on Thursday.

“Businesses and consumers have a substantial cash balance, while the debt-to-income ratio is a multi-year low. By ease the economic brakes full of repressive potential, investment, spending and housing activities are expected to react positively,” he said.

Here are the latest winners and losers from the Bank of England:

For those looking to buy a new home and get a cheap “fixed interest rate” mortgage transaction from a bank or lender, or for those redeeming new transactions with fixed interest periods due, the Bank of England’s base rate has been reduced by 25 benchmark points, which would be a boon.

Fixed-rate residential mortgages account for the majority (85%) of existing mortgages, according to data released by UK Finance on Thursday. Of the total fixed-rate transactions, UK financial analysis shows that a total of about 1.6 million ended in 2025, meaning the latest drop in key interest rates for Bank of England will be good news for those looking to find a new offer.

Of course, households who already have a fixed monthly mortgage will not feel the benefits of cutting interest rates. According to RightMove, the average 2-year fixed mortgage rate was 4.66% as of Thursday, while the 5-year fixed mortgage rate was 4.61%.

The cut is good news for the 591,000 homeowners in the UK, but with the base rate of the Bank of England, it is good news for the "stalker" mortgage rates. 25 benchmark points cuts, meaning Tracker, in the UK finance, said an average customer’s monthly payments were reduced by £29.

British mortgage expert Nicholas Mendes said in a comment from John Charcol in London that the cuts by 25 basis points “has brought some relief, especially for those on trackers and variable rate products that should reduce monthly repayments immediately.”

He added: "While fixed interest rates have been priced for most of this decision, the rate of cuts will support sentiment in the real estate market as affordability is extended and buyer activity slows down. This also gives lenders more breathing room to stay competitive, which can help stimulate demand, especially among first-time buyers," he added.

Consumers who want to borrow money for other things will also welcome lower interest rates and potentially lower interest rates on credit cards and personal loans, although it depends on your personal circumstances, including your credit history.

UK companies and consumers will also get some respite from central bank decisions, as lower interest rates can also be translated into cheaper borrowing and cheaper commercial loan repayments, freeing up cash for investment and growth.

Businesses will hope that lower interest rates will also increase consumer confidence and spending. The Labor government budget announced that it will be a special reward for the recent attacks of 5.5 million small and medium-sized enterprises in the UK in the country’s lowest wages and higher national insurance contributions.

At the same time, however, as energy prices rise (although temporary), any broader economic decline (although temporary) in the U.S.-led trade tariffs and export costs and export costs as well as forecast inflation rates may dampen consumer confidence and business sentiment.

Hobbs of Barclays Private Banking and Wealth Management noted Thursday that “the cyclical pulse of the UK economy has been strengthening over the past few months.” Household incomes are growing faster than inflation, and are already emerging in consumption. ”

This means that many British people may be reluctant to splurge on cash, which is still a sure cost of living after the surge in basic commodities and energy prices after the Ukrainian war.

Although price speeds have declined in recent months, the Bank of England warned in March that short-term inflation gains this year were mainly due to rising energy costs.

This led the central bank to warn that any reduction in interest rates would be "gradual and cautious" as it hopes to reduce inflation to its 2% target. But the rate of slowing down could change if U.S. trade tariffs weaken global demand and hit UK growth beyond expectations.

“As early as February, the mid-term economic and inflation outlook and the balance of risks suggest that BOE will keep pace in every quarter of 2025,” Peel Hunt’s Kallum Pickering noted Thursday. “Since then, a lot of changes have happened – if there is a chance to change the policy narrative, that’s it.”

"The potential for the transfer of cheap Chinese goods to Europe, coupled with lower global demand and lower import prices of pounds, will help keep the UK price block," Pickering noted.

"In addition, additional fear factors of increased uncertainty may weaken wages and prices. We believe that the market and the broader economy will respond positively to the BOE cuts this week and indicate a series of slowdowns in the future."