London: The Bank of England is anticipated to maintain its key interest rate at 4.0 percent during its upcoming meeting on Thursday. However, some analysts suggest that a surprise rate cut could still be a possibility, as the UK government prepares to present its annual budget.
According to Bangladesh Sangbad Sangstha, most analysts expect the BoE to keep the borrowing rate steady due to persistent high inflation, which remains above the central bank’s target. Kathleen Brooks, research director at XTB trading group, highlighted that recent weak economic data could lead to an unexpected rate reduction.
The upcoming meeting will also shed light on the BoE’s latest forecasts for inflation and economic output, coinciding with the Labour administration’s budget presentation. Prime Minister Keir Starmer’s government, led by finance minister Rachel Reeves, has indicated potential tax hikes in the November 26 budget to address the country’s high debt and inflation issues.
Rachel Reeves emphasized the need to make “necessary choices” to shield families from economic pressures, including high inflation and interest rates. In a recent pre-budget speech, she stressed her commitment to making informed decisions on fiscal policies.
BoE’s decision on interest rates is critical, as it influences the cost of mortgages and business loans provided by retail banks. The central bank, operating independently of the government, aims to maintain an inflation rate of 2.0 percent. Recent data shows inflation at 3.8 percent, slightly below the BoE’s earlier peak estimate.
The BoE’s last rate cut in August was its fifth since starting a trimming cycle in August 2024, shortly after Labour’s electoral victory. The central bank had lowered rates to counter the economic impact of US tariffs on the UK. As the BoE’s policymakers deliberate, investor strategist Neil Wilson from Saxo suggests that the decision could be swayed by Governor Andrew Bailey’s approach, especially given the current economic slowdown. Britain’s GDP growth decelerated to 0.3 percent in the second quarter, following a 0.7 percent increase in the first quarter.