August 2024 marked a significant shift in the UK's monetary policy, as it saw the first reduction in the official bank base interest rate since August 2023. This change came after a period of consistent rate hikes that began in late 2021. In a bid to minimize the economic effects of the COVID-19 pandemic, the Bank of England cut the official bank base rate in March 2020 to a record low of *** percent. This historic low came just one week after the Bank of England cut rates from **** percent to **** percent in a bid to prevent mass job cuts in the United Kingdom. It remained at *** percent until December 2021 and was increased to one percent in May 2022 and to **** percent in October 2022. After that, the bank rate increased almost on a monthly basis, reaching **** percent in August 2023. It wasn't until August 2024 that the first rate decrease since the previous year occurred, signaling a potential shift in monetary policy. Why do central banks adjust interest rates? Central banks, including the Bank of England, adjust interest rates to manage economic stability and control inflation. Their strategies involve a delicate balance between two main approaches. When central banks raise interest rates, their goal is to cool down an overheated economy. Higher rates curb excessive spending and borrowing, which helps to prevent runaway inflation. This approach is typically used when the economy is growing too quickly or when inflation is rising above desired levels. Conversely, when central banks lower interest rates, they aim to encourage borrowing and investment. This strategy is employed to stimulate economic growth during periods of slowdown or recession. Lower rates make it cheaper for businesses and individuals to borrow money, which can lead to increased spending and investment. This dual approach allows central banks to maintain a balance between promoting growth and controlling inflation, ensuring long-term economic stability. Additionally, adjusting interest rates can influence currency values, impacting international trade and investment flows, further underscoring their critical role in a nation's economic health. Recent interest rate trends Between 2021 and 2025, most advanced and emerging economies experienced a period of regular interest rate hikes. This trend was driven by several factors, including persistent supply chain disruptions, high energy prices, and robust demand pressures. These elements combined to create significant inflationary trends, prompting central banks to raise rates to temper spending and borrowing. However, in 2024, a shift began to occur in global monetary policy. The European Central Bank (ECB) was among the first major central banks to reverse this trend by cutting interest rates. This move signaled a change in approach aimed at addressing growing economic slowdowns and supporting growth.

The benchmark interest rate in the United Kingdom was last recorded at 4 percent. This dataset provides - United Kingdom Interest Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Policy interest rates in the U.S. and Europe are forecasted to decrease gradually between 2024 and 2027, following exceptional increases triggered by soaring inflation between 2021 and 2023. The U.S. federal funds rate stood at **** percent at the end of 2023, the European Central Bank deposit rate at **** percent, and the Swiss National Bank policy rate at **** percent. With inflationary pressures stabilizing, policy interest rates are forecast to decrease in each observed region. The U.S. federal funds rate is expected to decrease to *** percent, the ECB refi rate to **** percent, the Bank of England bank rate to **** percent, and the Swiss National Bank policy rate to **** percent by 2025. An interesting aspect to note is the impact of these interest rate changes on various economic factors such as growth, employment, and inflation. The impact of central bank policy rates The U.S. federal funds effective rate, crucial in determining the interest rate paid by depository institutions, experienced drastic changes in response to the COVID-19 pandemic. The subsequent slight changes in the effective rate reflected the efforts to stimulate the economy and manage economic factors such as inflation. Such fluctuations in the federal funds rate have had a significant impact on the overall economy. The European Central Bank's decision to cut its fixed interest rate in June 2024 for the first time since 2016 marked a significant shift in attitude towards economic conditions. The reasons behind the fluctuations in the ECB's interest rate reflect its mandate to ensure price stability and manage inflation, shedding light on the complex interplay between interest rates and economic factors. Inflation and real interest rates The relationship between inflation and interest rates is critical in understanding the actions of central banks. Central banks' efforts to manage inflation through interest rate adjustments reveal the intricate balance between economic growth and inflation. Additionally, the concept of real interest rates, adjusted for inflation, provides valuable insights into the impact of inflation on the economy.

From 2003 to 2025, the central banks of the United States, United Kingdom, and European Union exhibited remarkably similar interest rate patterns, reflecting shared global economic conditions. In the early 2000s, rates were initially low to stimulate growth, then increased as economies showed signs of overheating prior to 2008. The financial crisis that year prompted sharp rate cuts to near-zero levels, which persisted for an extended period to support economic recovery. The COVID-19 pandemic in 2020 led to further rate reductions to historic lows, aiming to mitigate economic fallout. However, surging inflation in 2022 triggered a dramatic policy shift, with the Federal Reserve, Bank of England, and European Central Bank significantly raising rates to curb price pressures. As inflation stabilized in late 2023 and early 2024, the ECB and Bank of England initiated rate cuts by mid-2024. Moreover, the Federal Reserve also implemented its first cut in three years, with forecasts suggesting a gradual decrease in all major interest rates between 2025 and 2026. Divergent approaches within the European Union While the ECB sets a benchmark rate for the Eurozone, individual EU countries have adopted diverse strategies to address their unique economic circumstances. For instance, Hungary set the highest rate in the EU at 13 percent in September 2023, gradually reducing it to 6.5 percent by October 2024. In contrast, Sweden implemented more aggressive cuts, lowering its rate to 2.15 percent by October 2025, the lowest among EU members. These variations highlight the complex economic landscape that European central banks must navigate, balancing inflation control with economic growth support. Global context and future outlook The interest rate changes in major economies have had far-reaching effects on global financial markets. Government bond yields, for example, reflect these policy shifts and investor sentiment. As of October 2025, the United States had the highest 10-year government bond yield among developed economies at 4.09 percent, while Switzerland had the lowest at 0.27 percent. These rates serve as important benchmarks for borrowing costs and economic expectations worldwide.

Central Bank Balance Sheet in the United Kingdom increased to 783711 GBP Million in November 19 from 771553 GBP Million in the previous week. This dataset provides - United Kingdom Central Bank Balance Sheet - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Between January 2018 and September 2025, the United Kingdom's consumer price inflation rate showed notable volatility. The rate hit its lowest point at *** percent in August 2020 and peaked at *** percent in October 2022. By September 2025, inflation had moderated to *** percent, indicating a gradual increase in inflation rates in the preceding months. The Bank of England's interest rate policy closely tracked these inflationary trends. Rates remained low at -* percent until April 2020, when they were reduced to *** percent in response to economic challenges. A series of rate increases followed, reaching a peak of **** percent from August 2023 to July 2024. The central bank then initiated rate cuts in August and November 2024, lowering the rate to **** percent, signaling a potential shift in monetary policy. In February 2025, the Bank of England implemented another rate cut, setting the bank rate at *** percent, which was further reduced to **** percent in May 2025 and remained at * percent as of September 2025. Global context of inflation and interest rates The UK's experience reflects a broader international trend of rising inflation and subsequent central bank responses. From January 2022 to July 2024, advanced and emerging economies alike increased their policy rates to counter inflationary pressures. However, a shift began in late 2024, with many countries, including the UK, starting to lower rates. This change suggests a potential new phase in the global economic cycle and monetary policy approach. Comparison with other major economies The UK's monetary policy decisions align closely with those of other major economies. The United States, for instance, saw its federal funds rate peak at **** percent in August 2023, mirroring the UK's rate trajectory. Similarly, central bank rates in the EU all increased drastically between 2022 and 2024. These synchronized movements reflect the global nature of inflationary pressures and the coordinated efforts of central banks to maintain economic stability. As with the UK, both the U.S. and EU began considering rate cuts in late 2024, signaling a potential shift in the global economic landscape.

United Kingdom UK: Real Interest Rate data was reported at -1.195 % pa in 2014. This records an increase from the previous number of -1.378 % pa for 2013. United Kingdom UK: Real Interest Rate data is updated yearly, averaging 1.802 % pa from Dec 1967 (Median) to 2014, with 48 observations. The data reached an all-time high of 6.438 % pa in 1985 and a record low of -12.172 % pa in 1975. United Kingdom UK: Real Interest Rate data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s United Kingdom – Table UK.World Bank.WDI: Interest Rates. Real interest rate is the lending interest rate adjusted for inflation as measured by the GDP deflator. The terms and conditions attached to lending rates differ by country, however, limiting their comparability.; ; International Monetary Fund, International Financial Statistics and data files using World Bank data on the GDP deflator.; ;

BOE Forecast: GDP per Hour Worked: YoY data was reported at 1.000 % in 2021. This records a decrease from the previous number of 1.250 % for 2020. BOE Forecast: GDP per Hour Worked: YoY data is updated yearly, averaging 1.000 % from Dec 2014 (Median) to 2021, with 8 observations. The data reached an all-time high of 1.250 % in 2020 and a record low of 0.500 % in 2017. BOE Forecast: GDP per Hour Worked: YoY data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.G043: Output Per Hour Worked: Year on Year Growth: Forecast.

In September 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In September 2025, Russia maintained the highest interest rate at 17 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at -0.3 percent in September 2025. In contrast, Russia maintained a high inflation rate of 8 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

In 2024, the gross domestic product (GDP) of the United Kingdom grew by *** percent and is expected to grow by *** percent in 2025 and by *** percent in 2026. Between 2027 and 2030, the economy is forecast to grow by ****percent every year. The sudden emergence of COVID-19 in 2020 and subsequent closure of large parts of the economy were the cause of the huge *** percent contraction in 2020, with the economy recovering somewhat in 2021, when the economy grew by *** percent. Long-term growth downgraded Although the UK economy will grow faster than expected in 2025, long-term economic growth is predicted to be slower. Increased geopolitical uncertainty as well as lower than expected productivity growth were some of the main reasons cited for this downgrade. In addition, the UK's inflation rate for 2025 was also revised, with an annual rate of *** percent predicated, up from *** percent in the last forecast. Unemployment has also been higher than initially thought, with the annual unemployment rate likely to be *** percent instead of *** percent. Long-term growth problems In the last two quarters of 2023, the UK economy shrank by *** percent in Q3 and by *** percent in Q4, plunging the UK into recession for the first time since the COVID-19 pandemic. Even before that last recession, however, the UK economy has been struggling with weak growth. Although growth since the pandemic has been noticeably sluggish, there has been a clear long-term trend of declining growth rates. The economy has consistently been seen as one of the most important issues to people in Britain, ahead of health, immigration and the environment. Achieving strong levels of economic growth is one of the main aims of the current government elected, although after one and a half years in power it has so far proven elusive.

Key information about United Kingdom Long Term Interest Rate

• United Kingdom Long Term Interest Rate: Month End: United Kingdom: Government Bond Yield: 10 Years was reported at 4.48 % pa in Oct 2025, compared with 4.76 % pa in the previous month.
• UK Long Term Interest Rate data is updated monthly, available from Jan 1979 to Oct 2025.
• The data reached an all-time high of 15.44 % pa in Sep 1981 and a record low of 0.13 % pa in Jul 2020.
• Long Term Interest Rate is reported by reported by CEIC Data.

• In the latest reports, UK Short Term Interest Rate: Month End: ICE LIBOR: 3 Months was reported at 0.09 % pa in Apr 2021.
• The cash rate (Policy Rate: Month End: Base Rate) was set at 4.00 % pa in Nov 2025.
• UK Exchange Rate against USD averaged 0.75 (USD/GBP) in Oct 2025.

Bank Lending Rate in the United Kingdom increased to 8.62 percent in September from 8.59 percent in August of 2025. This dataset provides - United Kingdom Prime Lending Rate - actual values, historical data, forecast, chart, statistics, economic calendar and news.

Money Supply M2 in the United Kingdom increased to 3178942 GBP Million in October from 3165508 GBP Million in September of 2025. This dataset provides - United Kingdom Money Supply M2 - actual values, historical data, forecast, chart, statistics, economic calendar and news.

The Gross Domestic Product (GDP) in the United Kingdom was worth 3643.83 billion US dollars in 2024, according to official data from the World Bank. The GDP value of the United Kingdom represents 3.43 percent of the world economy. This dataset provides the latest reported value for - United Kingdom GDP - plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news.

United Kingdom Credit Cond: SL: N3: HH: CA: Factor: House Prices Expectations data was reported at 0.000 % Point in Sep 2018. This records an increase from the previous number of -0.800 % Point for Jun 2018. United Kingdom Credit Cond: SL: N3: HH: CA: Factor: House Prices Expectations data is updated quarterly, averaging -0.300 % Point from Mar 2008 (Median) to Sep 2018, with 43 observations. The data reached an all-time high of 21.300 % Point in Dec 2015 and a record low of -69.200 % Point in Jun 2008. United Kingdom Credit Cond: SL: N3: HH: CA: Factor: House Prices Expectations data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.KB017: Credit Conditions Survey: Secured Lending: Next 3 Months.

The Monthly Business Survey (MBS) for Construction and Allied Trades is a monthly survey of businesses within the construction industry in Great Britain. The survey collects data about the value of work undertaken by GB businesses on new housing, new infrastructure, other new construction projects and repair and maintenance during the month. Information about employment is also collected on calendar quarter months.

The information is used to monitor the performance of the industry and contributes to gross domestic product (GDP). GDP is an important economic indicator used by the Bank of England, HM Treasury to monitor and forecast economic growth and to inform vital policy decisions.

As the data are open for revision for 13mths after annual delivery we will only deliver data which are no longer subject to revision. For example in January 2023 we will be able to deliver final data for December 2021. Ad hoc deliveries could be made subject to interest if needed however these are likely to be revised at a later point in time

United Kingdom BOE Forecast: Real GDP: YoY data was reported at 1.900 % in 2021. This records an increase from the previous number of 1.500 % for 2020. United Kingdom BOE Forecast: Real GDP: YoY data is updated yearly, averaging 1.600 % from Dec 2013 (Median) to 2021, with 9 observations. The data reached an all-time high of 2.700 % in 2015 and a record low of 1.200 % in 2019. United Kingdom BOE Forecast: Real GDP: YoY data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.A010: ESA 2010: GDP: by Expenditure: Year on Year Growth: Forecast.

BOE Forecast: Average Weekly Hours Worked data was reported at 32.250 Hour in 2021. This stayed constant from the previous number of 32.250 Hour for 2020. BOE Forecast: Average Weekly Hours Worked data is updated yearly, averaging 32.000 Hour from Dec 2014 (Median) to 2021, with 8 observations. The data reached an all-time high of 32.250 Hour in 2021 and a record low of 32.000 Hour in 2019. BOE Forecast: Average Weekly Hours Worked data remains active status in CEIC and is reported by Bank of England. The data is categorized under Global Database’s United Kingdom – Table UK.G025: Labour Force Survey: Weekly Hours Worked: Average: Forecast.