With Bank Rate now at 4%, financing conditions have eased
compared with last year—but the Bank of England is clear that the journey back to its 2% inflation target won’t be a straight line.
The Bank’s explainer sets out the rationale for recent cuts and why future moves will likely be cautious. For business owners, that means re-running 2025/26 plans with lower-but-not-low rates and paying close attention to September’s data. Bank of England
Inflation watch.
The ONS reported CPI inflation of 3.6% in June 2025 (up from 3.4% in May). The next key milestone is the August CPI release on 17 September, followed the same morning by private rent and house prices, and then producer price indices later in the month. These prints influence market rate expectations and, by extension, borrowing costs for floating-rate debt and new facilities.
What to do with this window:
Treasurers and FDs should refresh cash-flow forecasts using Bank Rate at 4% and test sensitivities for +/- 50 bps into Q4. Revisit loan covenants and headroom while conditions are benign. Consider whether to lock in portions of exposure (for example, partial fixes or interest-rate caps) and align timing of capex to funding availability. With HMRC interest also stepping down in August, it’s a good moment to prioritise on-time tax payments and clear old balances where feasible. GOV.UK
Customers and pricing.
Lower policy rates won’t instantly lower all customer borrowing costs; banks move at their own speed, and some input prices remain sticky. Keep an eye on services inflation and wage trends in ONS releases—if demand is price-sensitive in your market, consider targeted promotions or staged price reviews rather than blanket cuts.
Working capital discipline.
Falling rates shouldn’t mean relaxing on receivables. Tighten credit control now: agree payment terms, use automated reminders, and segment debt for early escalation. Supplier-side, renegotiate where base-rate-linked clauses exist.
Bottom line:
Treat the rate cut as breathing space, not a green light to over-extend. Anchor decisions to the data arriving in mid-September and keep hedging and liquidity options under review.
Book a Financing & Cash-Flow Clinic to stress-test debt costs at 4% Bank Rate and prepare for autumn data.
compared with last year—but the Bank of England is clear that the journey back to its 2% inflation target won’t be a straight line.
The Bank’s explainer sets out the rationale for recent cuts and why future moves will likely be cautious. For business owners, that means re-running 2025/26 plans with lower-but-not-low rates and paying close attention to September’s data. Bank of England
Inflation watch.
The ONS reported CPI inflation of 3.6% in June 2025 (up from 3.4% in May). The next key milestone is the August CPI release on 17 September, followed the same morning by private rent and house prices, and then producer price indices later in the month. These prints influence market rate expectations and, by extension, borrowing costs for floating-rate debt and new facilities.
What to do with this window:
Treasurers and FDs should refresh cash-flow forecasts using Bank Rate at 4% and test sensitivities for +/- 50 bps into Q4. Revisit loan covenants and headroom while conditions are benign. Consider whether to lock in portions of exposure (for example, partial fixes or interest-rate caps) and align timing of capex to funding availability. With HMRC interest also stepping down in August, it’s a good moment to prioritise on-time tax payments and clear old balances where feasible. GOV.UK
Customers and pricing.
Lower policy rates won’t instantly lower all customer borrowing costs; banks move at their own speed, and some input prices remain sticky. Keep an eye on services inflation and wage trends in ONS releases—if demand is price-sensitive in your market, consider targeted promotions or staged price reviews rather than blanket cuts.
Working capital discipline.
Falling rates shouldn’t mean relaxing on receivables. Tighten credit control now: agree payment terms, use automated reminders, and segment debt for early escalation. Supplier-side, renegotiate where base-rate-linked clauses exist.
Bottom line:
Treat the rate cut as breathing space, not a green light to over-extend. Anchor decisions to the data arriving in mid-September and keep hedging and liquidity options under review.
Book a Financing & Cash-Flow Clinic to stress-test debt costs at 4% Bank Rate and prepare for autumn data.