Interest rates are expected to remain high for a longer period of time than previously expected, according to the latest forecasts from the Organization for Economic Co-operation and Development.
The international think tank's outlook, updated following October's Budget, predicts the Bank of England's benchmark interest rate will return to 3.5% in early 2026. 
The previous forecast, published in May, predicted that interest rates would fall to 3.75% by the end of 2025.
In today's update considering the impact of the autumn budget, the OECD said it expects increased public spending to boost the economy in the short term.
However, it expects inflation to remain above target through 2025 and 2026 due to “wage-driven pressures on service prices and fiscal stimulus.”
Prime Minister Rachel Reeves said the think tank's update was good news.
She said: “Growth is our top priority and the OECD upgrade means the UK will become the fastest growing European economy in the G7 over the next three years.” .
But she added that “growth only matters if it is matched by more money in people's pockets,” and the government can achieve this by minimizing tax increases and encouraging investment. He said that he is trying to
Ben Thompson, deputy director general of the Mortgage Advice Bureau, said: “The OECD's forecasts introduce some uncertainty into the swaps market, which could lead to changes in mortgage rates over the coming days.” Ta.
However, he said this did not undermine market optimism as interest rates were still generally lower.
Thompson added: “2025 should be a good year for homeowners, so now is the time to prepare for your mortgage and talk to your broker.”
