BoE to hold UK rate at 4.50% despite weak economic outlook

Post by: Omar Nasser

Photo : Reuters

The Bank of England (BoE) is expected to keep the UK’s main interest rate at 4.50% on Thursday, even though the economy is weak and not growing much. The bank is unlikely to cut the rate because inflation is still high, and new wage and tax rules could make prices rise further.

The BoE’s committee, made up of nine members, is likely to hold the rate steady because inflation is still above the bank’s target of 2%. Businesses are expected to increase their prices soon due to a sharp rise in the minimum wage and higher payroll taxes.

Stay informed with the latest news. Follow DXB News Network on WhatsApp Channel  

In January, inflation in the UK rose to 3%, the highest in 10 months. Experts believe it could increase even more in the coming months, possibly reaching 4%.

Since August last year, the BoE has lowered its main interest rate three times by 0.25%, bringing it down from a 16-year high of 5.25%. The last cut was in February when inflation had dropped from record levels of over 10%.

If the bank continues this slow approach, it might reduce the rate again in May. By then, the BoE will have new economic data, and the governor will hold a press conference. The minutes from Thursday’s meeting will give a clearer idea of whether a May rate cut is likely.

The UK’s economy, the sixth-largest in the world, only grew by 0.1% in the last three months of 2024. This slow growth is a big challenge for the new Labour government, which came to power in July. The new government has made economic growth its top goal. However, the UK’s economy has struggled to grow steadily since the financial crisis in 2008-2009.

Some people are blaming Treasury chief Rachel Reeves for the weak economy. They say she was too negative when she took over the job in July. Critics also argue that her tax increases, especially on businesses, have made things worse by reducing investment and slowing down growth.

At the same time, US President Donald Trump’s trade policies are adding more uncertainty. His new tariffs on goods could slow down the global economy and increase prices. To protect the UK from these tariffs, Prime Minister Keir Starmer is trying to make a trade deal with the US. This deal could prevent heavy taxes on British exports and help the economy.

Despite these challenges, the BoE is not expected to rush into more rate cuts. The bank will likely wait to see if inflation goes down and how Trump’s trade policies affect the economy.

#trending #latest #BankOfEngland #UKEconomy #InterestRates #Inflation #UKFinance #EconomicGrowth #BoE #FinancialNews #MonetaryPolicy #UKFinanceUpdate #EconomyWatch #RateDecision #GlobalTrade #MarketTrends #UKInflation #headlines #topstories #globalUpdate #dxbnewsnetwork #dxbnews #dxbdnn #dxbnewsnetworkdnn #bestnewschanneldubai #bestnewschannelUAE #bestnewschannelabudhabi #bestnewschannelajman #bestnewschannelofdubai #popularnewschanneldubai