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Interest Rates
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UK gilt yields explained: what 2-year and 10-year yields tell youA gilt yield is the market return implied by the price and cash flows of UK government debt. Short and long gilt yields move for different reasons and feed into mortgages, corporate borrowing and equity valuations.UK fiscal headroom in 2026: what it is and how much the Chancellor hasThe latest formal OBR fiscal-rule assessment gave the current-budget rule £22 billion of headroom in November 2025. The March 2026 forecast did not reassess the rules, so the next official test is at the 28 October 2026 Budget.Sterling outlook in 2026: what moves the pound against the dollar and euro?A useful sterling outlook is not a GBP/USD target. It is a framework for relative interest rates, UK growth, inflation, fiscal credibility and external financing. Bank Rate is 3.75% ahead of the 17 September MPC decision.Are UK interest rates going down in 2026?Bank Rate is 3.75%. The Bank of England held in July 2026 by 6–3, with all three dissenters preferring a rise to 4%. Further cuts are possible, but they are no longer the default direction.Is the UK heading for a recession in 2026?The UK is not currently in recession. GDP grew 0.4% in July and 0.4% in the three months to July 2026. The main downside risks are a softer labour market, weak industrial activity and an inflationary energy shock.Are UK mortgage rates going down in 2026?Not consistently. Bank Rate is 3.75%, but quoted two-year fixes rose after wholesale rates increased: the Bank of England put the average 75% LTV two-year fix at 4.92% in July 2026. The effective rate on newly drawn mortgages was 4.45% in July.What is the Bank of England base rate?The Bank of England base rate is currently 3.75 percent, set by the Monetary Policy Committee. It is the rate at which the Bank lends to commercial banks overnight, and it flows through to savings rates, mortgage rates, and the cost of business borrowing across the economy.Bank of England MPC meeting dates 2026The Monetary Policy Committee meets eight times a year to set the base rate. Here are the scheduled decision dates for 2026, with the next announcement due on 30 July alongside a Monetary Policy Report.What is quantitative easing?Quantitative easing is a form of monetary policy in which a central bank creates new money to buy financial assets, typically government bonds, to lower borrowing costs and stimulate economic activity when conventional interest rate cuts are no longer sufficient.UK inflation forecast for 2026: where CPI goes nextUK CPI was 2.9% in July 2026, above the Bank of England’s 2% target. The Bank expects energy to push inflation higher again in the near term, while underlying domestic inflation continues to cool.What is monetary policy?Monetary policy is the use of interest rates, money supply, and other financial tools by a central bank to manage inflation and economic conditions. In the UK, it is set by the Bank of England's Monetary Policy Committee, which meets eight times a year.What are UK gilts?UK gilts are government bonds issued by the Treasury to finance public borrowing. They pay a fixed rate of interest and return the principal at maturity. Gilt yields are one of the most important indicators in UK financial markets, influencing mortgage rates, pension valuations, and government borrowing costs.What is RPI in the UK, and how is it different from CPI?UK RPI inflation was 3.2% in July 2026, compared with CPI at 2.9% and CPIH at 3.1%. RPI is still used in contracts and indexation, but it is not the Bank of England’s inflation target measure.