BOE Expected to Keep Rates at 4.50% Amid Gloomy Economic Outlook

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The Bank of England is expected to keep UK interest rates unchanged on Thursday, despite a sluggish economy and growing uncertainty due to U.S. President Donald Trump's tariff policies. The nine-member Monetary Policy Committee is likely to maintain the main interest rate at 4.50%, as inflation remains above the target and is expected to rise further due to increased prices from higher minimum wages and payroll taxes.

In January, UK inflation reached a 10-month high of 3%, well above the Bank's 2% target, and many economists predict it could rise to 4% in the coming months. The Bank has already lowered its rate from a 16-year high of 5.25% three times since August, most recently in February, as inflation eased from levels above 10%.

If this cautious approach continues, the Bank may cut rates again at its May meeting, following its latest economic projections and a press conference by Governor Andrew Bailey. The minutes from Thursday's decision will provide more insight into whether a May rate cut is likely, as many economists anticipate.

The UK's economy, the sixth-largest in the world, grew by just 0.1% in the fourth quarter, a disappointing result for the newly elected Labour government, which has made economic growth a top priority. Critics argue that Treasury chief Rachel Reeves, since taking office in July, has contributed to the gloomy economic outlook by being overly pessimistic and raising taxes, particularly on businesses.

Additionally, concerns about U.S. trade tariffs, which could slow global growth and raise prices, add to the economic challenges. UK Prime Minister Keir Starmer hopes to avoid widespread tariffs on UK imports into the U.S. through a modest trade deal.

Paraphrasing text from "AP" all rights reserved by the original author