**Interest Rate Rollercoaster: Bank of England Set to Slash Rates Amid Economic Jitters!**

The Bank of England is anticipated to announce a cut in interest rates this Thursday, lowering the cost of borrowing to its most affordable level in over two years, with projections suggesting a decrease from 4.25% to 4%. This reduction marks the fifth cut since last August and serves as a significant milestone as it would bring rates to their lowest since March 2023.

For homeowners, a reduced base rate could mean a savings of approximately £40 per month on an average standard variable rate mortgage of £250,000 over 25 years, according to Moneyfacts. However, this presents a double-edged sword for savers, as the average return on savings is also expected to slide from 3.9% last August to just 3.5%, leading some experts, including Rachel Springall from Moneyfacts, to warn that savers could face increasing challenges.

As part of this economic landscape, the Bank of England also plans to unveil forecasts amid concerns that the economy has faltered in April and May, possibly leading to a significant spending gap that may prompt the government’s consideration of tax increases in the upcoming Autumn Budget. Upcoming data from the Office for National Statistics will provide insight into the UK’s economic performance for the period between April and June, following a 0.7% growth in the first quarter.

Experts believe that while interest rates might continue to decrease, the pace is expected to slow. Liz Martins, a senior UK economist at HSBC, predicts that borrowing costs will decrease to 3% by late 2026, while cautioning that the bank might proceed carefully in its upcoming decisions. Interestingly, this expected cut comes despite inflation rising above the Bank’s target of 2% for the first time, recorded at 3.6% as of June, influenced by increasing costs in essentials such as food, clothing, and transportation. The labor market is also exhibiting signs of cooling, with dips in employment numbers and a rise in the jobless rate, which could further impact inflation dynamics.