Published by Global Banking & Finance Review®
Posted on March 17, 2025
3 min readLast updated: January 24, 2026
Add as preferred source on GoogleThe Bank of England is expected to keep interest rates unchanged, balancing global trade tensions and mixed UK economic data.
By Andy Bruce
(Reuters) - The Bank of England is likely to keep interest rates on hold on Thursday and stick to its mantra of only gradual moves ahead as it grapples with the fallout from U.S. President Donald Trump's trade war and mixed news on Britain's economy.
All 61 economists polled by Reuters last week expected the BoE to leave its benchmark interest rate on hold at 4.5%, with the next cut likely in May, followed by further reductions in August and November.
While there has been limited news on Britain's economy since the BoE's last rate cut on Feb. 6, Trump's stop-start announcements of tariffs on U.S. allies have thrown financial markets into a tailspin and raised questions about the outlook for inflation around the world.
Share prices have fallen dramatically over the past two weeks, especially in the United States, wiping out more than $5 trillion in value in U.S. markets over concerns that Trump's policies could lead to a U.S. recession.
By contrast, the announcement of a 500-billion-euro infrastructure and defence investment plan by Germany's leading political parties boosted the value of many manufacturers.
"Global developments around tariffs and defence spending have mixed implications. We suspect the BoE won't want to rush to judgement on what it all means for the UK economy, with no concrete news yet," Elizabeth Martins, senior UK economist at HSBC, said.
Unlike the European Central Bank which cut borrowing costs for the sixth time since June earlier this month, the BoE has moved only carefully on rates since a first cut last August.
Data published last week showed Britain's economy contracted unexpectedly in January but there was also a noticeable jump in public expectations for near- and long-term inflation.
The Monetary Policy Committee will have early access to labour market figures that are due to be published on the morning of Thursday's interest rate announcement.
"We're probably going to see some slowdown in hiring which, other things being equal, should mean wage pressures moderate," Dean Turner, an economist at UBS Wealth Management, said. "But I'm not expecting that we're going to see a sharp increase in layoffs."
The Reuters poll pointed to a 7-2 split on the committee in favour of keeping rates on hold.
In February, seven MPC members backed a quarter-point cut while two opted for a bigger half-point reduction.
Investors will be alert to any changes in the views of MPC members, some of whom have sounded more worried about the risk of persistent inflation than others.
The MPC will have to wait for its May meeting to discuss any measures finance minister Rachel Reeves takes on March 26 to protect her fiscal rules which at present look under threat because of weaker than expected growth and higher borrowing costs.
"The BoE will have to incorporate additional (fiscal) tightening in the upcoming Budget as it meets in May, and we expect a cut at that meeting," Allan Monks, economist at J.P. Morgan, said.
Economists in the Reuters poll mostly bumped up their forecasts for inflation this year. It is now expected to average 3.0%, up from 2.8% in the previous poll.
They mostly predicted a stable unemployment rate but 15 of 16 respondents to an extra question said risks were tilted to the upside of their forecast.
(Additional reporting by Hari Kishan and Shaloo Shrivastava; Polling by Mumal Rathore, Anant Chandak and Debrah Gomes; Editing by Andrew Heavens)
The main topic is the Bank of England's decision to likely keep interest rates unchanged amid global economic uncertainty.
Global trade tensions, particularly from the U.S., are impacting financial markets and creating uncertainty for the UK economy.
Economists have slightly increased their inflation forecasts for the UK, expecting it to average 3.0% this year.
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