The Bank of England’s (BoE) decision to lower interest rates to 4.25% this week creates an opportunity to review how you manage your money.

It could be worth looking at its impact on mortgages, savings accounts and investments to help ensure you’re well-positioned financially – for your day-to-day needs and future goals.

While interest rates tend to move in small percentages, it’s important to look at their cumulative effect on your finances over time. And when it comes to managing this, we believe it’s important to take your time and carefully consider all your options.

While the Bank of England base rate has been falling, it still remains much higher than a few years ago – it was below 2% for 13 years from January 2009.

Sub-2% rates rather limited your options for growing the money you put aside for the long term. For example, savings accounts, while providing security and peace of mind, were unable to provide substantial rates of interest.

But today, with interest rates unlikely to return to those depths for the foreseeable future, there is greater choice when managing your money.

Savings accounts could continue to provide relatively attractive interest rates, investors could benefit from increased public spending – potentially good for share prices – and borrowers could find it cheaper to take out a loan.

Crucially, putting in place the most appropriate mix of these options for your needs could help you grow  your money for the future. It could also set your finances up for that next big opportunity in your life – whether that’s buying your dream house or funding a passion project.

The value of investments and the income from them could fall as well as rise and you may not get back what you put in. You should continue to hold cash for your short-term needs. Credit subject to status. Exclusions may apply. Over 18s only.

Slow economic growth in the UK has contributed to annual inflation gradually falling this year, from 3% in January to 2.6% in March.

That’s still above the BoE’s 2% target. But for context, it’s down from the dizzying heights of 11.1% for the year to October 2022 – its highest level for 40 years.

This has enabled gradual interest rate cuts from the BoE since last August.

US President Trump’s extensive tariffs on key trading partners cast a shadow on what might happen next with interest rates. But they are still expected to fall further this year in the UK.

Currently, markets expect two more interest cuts from the BoE in 2025 – an expectation recently backed up by the International Monetary Fund (IMF) in its latest forecast. The IMF also expects UK inflation to drop to 2.2% by 2026.

While these are predictions, one thing is more certain. Whether interest rates fall quickly, slowly or not at all, a solid, holistic, long-term financial plan could benefit you and your family enormously.

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If you’d like to find out how you could build your finances for the future in the current economic environment, contact your Premier team.