Today, the Bank of England’s Monetary Policy Committee announced its decision to lower the base rate to 4.25%. Find out what this means for your savings, and what you could do next.
Falling inflation and rising energy costs have contributed to renewed pressure on the Bank of England to cut the base rate in an effort to kickstart the UK economy. Economic stagnation has been at the forefront of decision makers’ minds, and the base rate cut reflects a complex weighing up of inflation risks vs downside risks to growth.
The Bank of England has warned that inflation is likely to rise again this year, potentially up to 4%, before falling back to their 2% target. If this prediction is correct, many businesses and individuals in the UK may find their spending power significantly reduced.
As such, it’s important to maximise the interest you earn on your savings as much as possible.
A base rate cut means that any savings you have in variable rates are likely to have their rates reduced. This includes Instant Access and Notice Accounts. Rates on new Fixed Term deposits are also likely to be cut, though if you already have one opened, this will not be affected.
While this news will disappoint savers, the base rate cut represents an opportunity to look for competitive interest rates and consider locking into fixed-term products before they are cut.
A fixed-term deposit account allows you to receive a fixed interest rate for a set period of time that will not change. Shorter-term fixed-rate products, such as 3 month, tend to have lower rates than longer maturities, such as12 month fixed-rate products, but this range of maturity options allows you to judge how the market is going and access your funds when it suits you.
A recent study by ClearBank, in collaboration with YouGov, found that over 50% of UK savers were considering switching their savings provider. Yet in the same study, lethargy was identified as the most significant barrier to savers getting better interest rates.[1]
With Akoni Hub, you can access a wide range of savings products from multiple Bank Partners, all in one platform. One application is all you’ll need to access these savings.
Check out some of our best rates below for individuals and businesses*:
Individuals:
Businesses:
*rates correct as of 6 May 2025 and at AER
What is inflation?
Inflation is the term for when the price of goods and services rises. A low and stable inflation helps the economy grow, and prevents deflation, which is when the price of goods and services falls, leading to job cuts and lower wages.
Why does the Bank of England change interest rates?
Interest is the extra amount you get charged to borrow money. So, if you borrowed £10 at 4% interest, you would have to repay £14 (the £10 you borrowed + £4 in interest). While this primarily affects loans and mortgages, the same mechanism is going on when you save money: the bank is borrowing your money and paying you the charge.
The Bank of England increases the base rate if the cost of goods and services are rising too quickly (which can lead to higher than desired inflation) to dissuade borrowing. When rates rise, people typically save more, which leads to less spending and slows the demand for goods and services.
Conversely, when interest rates are lowered, this tends to encourage borrowing and spending.
When does the Bank of England’s Monetary Policy Committee meet?
The Monetary Policy Committee, made up of nine members, meets eight times in a year. Here are the remaining dates in 2025:
19 June
7 August
18 September
6 November
18 December
Secure your best rate today by starting an application on the platform today. If you'd like more information about the platform, please contact the team either by email - contact@akonihub.com - or by calling 020 3137 9388.
Sources:
[1] ClearBank| UK consumer attitudes to saving and investing YouGov
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