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The interest rate has been stable for around eight months. The last rise was in August 2023, when the base rate rose by 0.25% to 5.25%, and it has remained there since. Inflation has headed in the right direction, currently at 3.4% for CPI and 3.8% for CPIH.

So when will we start to see the rate fall, and where is it expected to be by the end of 2024?

Analysts

Various analysts' views, which are often more reliable than others, suggest a general consensus that rates will fall to around 4.25% by year-end. Some were even going as low as 3.75% in the last couple of months. Many are revising that position to between 4.75% and 5%. Capital economics predicts 4.5%, with a gradual fall to 3% by the end of 2025.

Bank of England

The BoE is a bit less bullish, but they always are. Catherine Mann, who votes on interest rates each time the Monetary Policy Committee meets to decide on rates, recently suggested the market was pricing in too many cuts this year. She also highlighted that wage dynamics are stronger and more persistent than in the US and Euro area. The UK was unlikely to be ahead of either regarding cutting rates.

My View

Ultimately, it's difficult to predict what will happen. Most expect the first reduction to come in June this year. As we have seen in the past few years, unpredictable events can change the course of pretty much anything!

Will interest rates fall this year? Yes, I think so; it's just not as much as markets were anticipating and not as much as we would like. It seems likely that the one to watch is the FED in the USA. Once they start moving rates, the UK will follow, but it would not appear before.

Assuming the moon and the stars align, there will be no more bumps in the road from inflation or anything else. I hope that by the end of 2024, the base rate will be 4.5%.