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Bank of England Expected to Hold Rates at 4.5% as Economic Pressures Mount

The central bank faces inflation concerns, sluggish growth, and global trade risks while divisions persist over future rate cuts.

A person eats near the Bank of England building in London, Britain, February 3, 2025. REUTERS/Toby Melville/File Photo
A woman walks past the Bank of England, at the financial district, in London, Thursday, March 13, 2025. (AP Photo/Kin Cheung)
A woman walks past the Bank of England, at the financial district, in London, Thursday, March 13, 2025. (AP Photo/Kin Cheung)
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Overview

  • The Bank of England is predicted to maintain its benchmark interest rate at 4.5% in its March meeting, reflecting a cautious stance on monetary policy.
  • Inflation is forecasted to rise to 3.7% in 2025, exceeding the central bank's 2% target, driven by higher energy costs and persistent price pressures.
  • The U.K. economy shows signs of stagnation, with weak growth data and concerns over the impact of upcoming employer tax hikes on hiring and investment.
  • Divisions within the Monetary Policy Committee highlight differing views on the pace of future rate cuts, with some members advocating for a faster approach.
  • The U.K. Treasury's 'Spring Statement' next week is expected to address fiscal challenges, including potential spending cuts or tax increases, amid downgraded economic forecasts.