Bank of England to maintain interest rates at 4.5%

The Bank of England is expected to keep interest rates steady at 4.5% when it meets on Thursday. This decision comes as the U.K. faces economic challenges both locally and globally. Concerns about U.S. trade tariffs under President Donald Trump and the potential for a global trade war are causing uncertainty. These factors could lead to higher inflation in the U.K. Meanwhile, the U.K. economy shows signs of slowing, with recent growth data reflecting weak performance. The Bank of England had previously indicated caution about the economy. In February, they lowered the growth forecast for 2025 and predicted a temporary rise in inflation to 3.7%, above their 2% target. Bank Governor Andrew Bailey has also highlighted the risks to the economy posed by tariffs, stating that they could leave residents with less money. There is some disagreement among Bank of England officials about interest rate cuts. In February, a majority supported a cut, but not all members agreed. Economists believe this Thursday's vote will be closely watched to see if there is a shift in opinions. The Bank's meeting comes just before the U.K. Treasury's "Spring Statement" on March 26. Chancellor Rachel Reeves is under pressure to cut public spending or raise taxes due to increased borrowing costs. There is talk of cutting welfare payments, but this idea faces controversy within the government. The Office for Budget Responsibility (OBR), the U.K.'s fiscal forecaster, is expected to downgrade its economic outlook. This could increase the pressure on Reeves to change her policy plans. The Chancellor had hoped to present forecasts without adjustments, but rising market interest rates and high borrowing have complicated matters.