Bank of England in London on February 12, 2024.
Henry Nicholls | AFP | Getty Images
The Bank of England is expected to hold interest rates when it meets Thursday, as the UK faces economic winds and at home and abroad.
The central bank is very likely that it will retain its reference interest rate of 4.5% at its March meeting, given the unpredictability of the trade tariff of President Donald Trump and the New Global Trade War and how these factors could influence inflation in the UK
Boe is also convened As the Great Britain’s economy shows the signs of stopping, with monthly growth data showing anemic production. The meeting on Thursday comes only a few days before the change in the taxation of government taxation that proved unpopular with companies enters into force, which they say that their growing tax burden could alleviate growth, investment and jobs.
For its part, the Bank of England has already warned at its last meeting in February that it will be carefully walked because it has reduced its growth forecast in the UK for 2025 and predicted a temporary ascent In the rate of inflation at 3.7% – above the goal of the bank of 2% – for which the creators of the Boe policy said it would be caused by higher energy prices.
As for Trump’s tariffs, the Governor of Bank of England Andrew Bailey warned earlier in March that potential trade duties are another threat to economics and growth of Earth, speaking to British legislators If “the risks for the economy in the UK, and indeed the world economy, significant” and that the citizens of the UK would have less money “in their pockets” as a result of tariffs.
Disagreement in the committee
In February, most of the seven members from the Nine Voting Committee voted in for a decrease, with two MPC members, including the famous “Hawk” Catherine Mann, voting for larger equipment.
Economists say the vote will be carefully observed on Thursday.
“There are visible signs of a disagreement in the Bank of England on the pace of reduction of the rates of the necessary this year. But with the growth of salaries and inflation, we remain sticky, we expect the bank to keep the rates on hold this Thursday, on the eve of the next decrease in the May stop,” said James Smith, developed the market economist on Monday.
Andrew Bailey, Governor of the Bank of England, during a press conference at financial stability at the Central Bank’s headquarters in London, November 29, 2024.
Bloomberg | Bloomberg | Getty Images
“The drama is not often synonymous with the Bank of England. But the February meeting was nothing less than a bomb. [BOE committee member] Catherine Mann, who has led to the rates for months, surprised her with her vote to reduce the 50 base points. And that asked the question: if the bow-hawk is ready to vote for faster reduction of the rates, will the rest of the committee soon follow the lawsuit? “Smith asked.
“It seems that for all excitement, the answer is not. Most officials who have spoken since they hit a much more cautious tone,” he noted, and Ing will predict three more decreasing rates this year. However, he admitted that inflation pressures put the central bank in a “unpleasant position”.
Budget changes?
Boe meets the days before the “Great Britain’s Treasury” on March 26, when British chancellor Rachel Reeves is an update of her plans for the British economy.
The Minister of Finance comes under pressure to reduce public consumption, to further increase taxes, or to bend the bent government self -imposed fiscal rules due to higher borrowing costs, with the yield of debt in the UK in recent months. The treasury has exhausted the idea of reducing consumption on the payment of well -being, but the idea remains controversial among the legislators in the center of the Center.
Reeves’ ‘Spring Statement’ will be published together with the economic forecasts of the Budget Responsibility Office, an independent economic and fiscal forecast in the UK, which gives its assessment of the probable influence Government plans of taxation and consumption which were announced last fall.
This budget included £ 40 billion ($ 51.9 billion) of tax rise – but the burden was mostly falling on companies – to include black hole in public finances and allow investments in public services.
Rachel Reeves, Minister of Finance in the UK, speaking on CNBC “Squawk Box” outside the World Economic Forum in Davos, Switzerland, January 2, 2025.
Gerry Miller | CNBC
The latter is expected to reduce its economic forecasts in the UK, which is further pressure on Reeves to change her policy plans.
“It was not supposed to be like this. UK Chancellor Rachel Reeves planned to present the official two-year prognosis of the Government on March 26. Without any changes in politics. However, the increase in market interest rates, high borrowings in the Fiscal year 2024-25, and a possible fall on Monday, analyte for budget responsibility, growth budget.
“Without a reduction in consumption or increase in taxes, an eyelash would predict that the Government misses its fiscal rule on daily consumption with tax revenues by 2029-30. To avoid six months of speculation about how Reeves will completely be completely budget in the fall.
