UK interest rate predictions fall as US and Iran agree two-week ceasefire

Markets now forecast one rate rise this year, down from two on Tuesday, although mortgage rates may not fall quickly

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City traders have cut their forecasts for UK interest rate rises this year, after the US and Iran agreed a two-week ceasefire.

The money markets are now fully pricing in only one rise in UK interest rates by December, which would take the Bank of England’s base rate back up to 4%. On Tuesday, two rate rises were fully priced in, as Donald Trump threatened that a “whole civilisation will die” unless Tehran complied with his demands to reopen the strait of Hormuz.