Interest rates have already started to go back down in 2024 and 2025 after reaching high levels previously. The Bank of England has made several cuts, reducing the base rate to 4% as of August 2025, and further cuts are expected but with a gradual and cautious approach depending on inflation and economic conditions. Some analysts forecast that interest rates may settle around 3.25% by mid-2026, but the pace and extent of further reductions remain uncertain due to inflation and economic factors.

In the US, after cuts in late 2024, the Federal Reserve has paused most rate cuts in 2025 but may resume cuts as early as September or later in 2025, possibly reducing the federal funds rate gradually toward 3.75% to 4.00% by the end of the year.

Overall, while some reductions have already occurred, significant drops in interest rates are expected to occur slowly over the course of 2025 into 2026, contingent on inflation staying near targets and economic stability.