05.02.202608:29:01UTC+00Bank of England to Keep Rates Steady

The Bank of England is anticipated to maintain the current interest rate at 3.75% during its meeting on Thursday, as decision-makers seek more definitive evidence that inflation is being effectively managed despite rising concerns about the labor market conditions. Market predictions indicate a less than 1% likelihood of an interest rate reduction, with most economists forecasting a 7-to-2 vote in favor of maintaining the rate, with only Alan Taylor and Swati Dhingra expected to advocate for a decrease.

Inflation persists at a relatively high rate of 3.4%, although it is projected to decline to the target level of 2% by the second quarter, prompting cautiousness among more hawkish members. Concurrently, unemployment has climbed to 5.1%, accompanied by an uptick in redundancies, sparking worries about potential economic instability. Recent economic indicators present a mixed picture, with robust GDP growth, healthy retail sales, and burgeoning business activity contrasted by the weakening labor market. Governor Andrew Bailey is likely to support holding the rate steady while hinting at a potential slow reduction in the future, as market projections suggest there is about a 70% probability of a rate cut occurring in April.