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The
nine-member Monetary Policy Committee is expected to keep the
bank's main interest rate at 4.50%, given that inflation remains
above target and set to go higher in the coming months, as firms
are expected to raise prices as a result of a big increase in
the minimum wage and higher payroll taxes.
Inflation in the U.K. rose to a 10-month high of 3% in January —
further above the bank's target of 2%. And many economists think
it could rise as high as 4% in the coming months.
The rate-setting panel has reduced the bank's main rate from a
16-year high of 5.25% by a quarter of a percentage on three
occasions since last August, most recently in February, after
inflation fell from multi-decade highs of over 10%.
If it pursues this gradual approach, then it would cut again at
its next meeting in May, when it will be armed with the bank's
latest economic projections and Gov. Andrew Bailey next holds a
press conference. The minutes accompanying Thursday's decision
will give financial markets a better steer about whether a May
cut is as nailed-on as many economists think.
The British economy, the sixth-largest, eked out modest growth
of 0.1% in the fourth quarter, a hugely disappointing outcome
for the new Labour government, which has made boosting growth
its number one economic policy. Since the global financial
crisis in 2008-9, the British economy’s growth performance has
been notably below its long-run average.
Critics say Treasury chief Rachel Reeves has been partly
responsible for the gloomy economic news since Labour returned
to power in July after 14 years, because she was overly downbeat
when taking on her role and has since increased taxes,
particularly on businesses.
There's also the complication of U.S. President Donald Trump's
tariff policies, which economists worry would lower global
growth and lead to an uptick in prices. British Prime Minister
Keir Starmer is hoping that a modest trade deal will spare
widespread tariffs being slapped on U.K. imports into the U.S.
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