February 12, 2024 at the Bank of England in London.
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The Bank of England will generally hold interest rates when it meets Thursday as the UK faces economic headwinds at home and abroad.
Given President Donald Trump’s trade tariffs and the fledgling global trade war and how these factors affect UK inflation, the central bank is most likely to keep its benchmark interest rate at 4.5% at its March meeting.
The central bank is also convening Monthly growth data show anemia output as the UK economy shows signs of stagnation. Thursday’s meeting came days before the UK government’s tax changes came into effect, and businesses proved unpopular, saying their rising tax burden could undercut growth, investment and job opportunities.
The Bank of England had warned at its last meeting in February that it would steer cautiously as it lowered the UK’s growth forecast for 2025 and Forecasts to rise temporarily As inflation rose to 3.7% (above the bank’s target 2%), BOE policymakers said this would be caused by higher energy prices.
As for Trump’s tariffs. Tell British MPs Due to the tariffs, the “risks of the British economy and even the world economy” are substantial, and the money of British citizens will be reduced.”
Committee objection
In February, seven of the nine monetary policy committees voted for the cut, with two of the MPC members, including the famous “Hawke” Catherine Mann, voted to decide on a larger trim.
Economists say Thursday’s voting allocation will be closely watched.
“There are clear signs of disagreement in the rate of cuts required this year. However, with wage growth and inflation continuing to stick, we expect the bank to maintain its holding rate until the next tax cut in May,” said James Smith, who developed a market economist on ING and a market economist on ING.
Bank of England Governor Andrew Bailey was at a press conference on financial stability report at the headquarters of the Central Bank of London on November 29, 2024.
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“Drama is not usually synonymous with the Bank of England. But the February meeting was simply a bombshell. (Boe committee member) Catherine Mann Catherine Mann has been leading the opposition in a cut-off for months to surprise everyone.
“The answer seems to be no, though. Most officials who have spoken have been more cautious.” Nevertheless, it acknowledged that inflationary pressures put central banks in an “uncomfortable position.”
Budget change?
BOE was a few days before the British Treasury issued its “Spring Statement” on March 26, when Prime Minister Rachel Reeves introduced her latest news about the UK’s economic plan.
The Treasury Secretary is under pressure to cut public spending, further increase taxes, or succumb to government self-implemented fiscal rules at higher borrowing costs, with yields on UK debt rising in recent months. The Treasury Department has proposed the idea of cutting spending, but this idea among the central labor government’s legislators remains controversial.
Reeves’ “Spring Statement” will be announced along with economic forecasts from the UK’s independent economic and fiscal forecaster’s office, which evaluates it Government tax and expenditure plans Announced last fall.
The budget includes a tax rise worth £40 billion ($51.9 billion) – the burden falls primarily on businesses to fill black holes in public finances and allow investment in public services.
British Finance Minister Rachel Reeves spoke on January 22, 2025 at CNBC’s “Squawk Box” outside the World Economic Forum in Davos, Switzerland.
Gerry Miller | CNBC
It is widely expected that the OBR will downgrade its UK economic forecasts, putting further pressure on Reeves to revise its policy plan.
“It shouldn’t be like this.
“Without cutting spending or tax increases, the OBR will predict that the government has missed the daily spending of its fiscal rules, entirely until 2029-30 years before 2029-30. To avoid six months of speculation, to guess how Reeves will make up for the shortfall of the next comprehensive budget in the fall,” he added that Chancellor must take action. ”
