UK interest rates are widely expected to be cut on Thursday, taking the cost of borrowing to its lowest level for more than two years.
Financial markets predict that the Bank of England will reduce interest rates to 4% from 4.25% in its fifth cut since last August, taking it to the lowest since March 2023.
A lower base rate can reduce monthly mortgage costs for some homeowners but it also means a smaller return for savers.
The Bank of England will also publish its forecasts for an economy that failed to grow in April and May – potentially creating a yawning spending gap which the government could choose to fill by announcing tax rises in the Autumn Budget.
Next week, the Office for National Statistics will release data on how the UK economy performed between April and June.
It grew by 0.7% in the first three months of the year.
If the Bank does trim rates, repayments on an average standard variable rate mortgage of £250,000 over 25 years will fall by £40 per month, according to financial information company Moneyfacts.
But for savers, the average return rate would fall from 3.9% in August last year to 3.5%, the financial data firm said.
“Savings rates are getting worse and any base rate reductions will spell further misery for savers,” said Rachel Springall, finance expert at Moneyfacts.
UK interest rates are expected to continue falling, though not at the same pace as the market has seen since last year.
“We are expecting more cuts,” said Liz Martins, senior UK economist at HSBC.
She told the BBC’s Today programme she forecasts that borrowing costs will fall to 3% by the latter part of 2026. “But from today I do think the Bank of England will be a bit cautious,” Ms Martins added.
Interest rates are expected to be cut despite inflation – which measures the pace of price rises – climbing above the Bank of England’s 2% target.
In the year to June, inflation rose to 3.6% due in part to the higher cost of food and clothing as well as air and rail travel.
However, there are signs that the UK employment market is cooling which could weigh on inflation.
Recent figures show that the number of people on payrolls is falling, vacancies are lower and the jobless rate has ticked higher.
Meanwhile, annual growth in average regular earnings, excluding bonuses, slowed to 5% between March and May.
Employers are facing higher costs, including an increase in National Insurance Contributions and the national minimum wage.
We will bring you live reporting from the Bank when we get the decision at 1200 along with expert analysis on what it means for you and your money.