The Bank of England is expected to cut interest rates on Thursday, which will be the third rate cut since the beginning of the COVID-19 in 2020. The Bank needs to help the weak economy cope with the still strong inflation pressure.

Due to concerns about the UK Chancellor of the Exchequer Rachel Reeves raising taxes on employers, global trade risks caused by US President Trump, and rising costs, the UK economy has hardly grown since mid-2024.

But price pressures remain high, which limits Bank of England Governor Andrew Bailey and his colleagues from expressing their views on plans for 2025 on Thursday.

The Bank of England's benchmark interest rate is currently 4.75%, the highest among large developed economies. It is widely expected that the central bank will cut interest rates by 25 basis points on Thursday, reaching the same level as Norway and approaching the Federal Reserve's interest rate range of 4.25-4.5%.

Matt Swannell, Chief Economic Advisor of EY ITEM Club, a forecasting agency, stated that there are increasing signs of economic stagnation in the UK, which could put more pressure on decision-makers at the Bank of England.

Swannell said, "This does not eliminate the long-term difficulties faced by the Bank of England. Its latest forecast may indicate that economic growth will weaken compared to three months ago, but inflation rates will be higher in the near future

The Bank of England will release its latest economic forecast and interest rate decision at 1200 GMT, and Bailey and other senior officials will hold a press conference in half an hour.

Investors expect at least three 25 basis point interest rate cuts by the end of 2025. Last month's Reuters survey showed that most economists expect the Bank of England to cut interest rates four times this year.

However, the Bank of England is also concerned about price pressure. The survey shows that consumers have raised their expectations for inflation, and businesses also plan to increase prices in the coming year. Wage growth unexpectedly accelerated at the end of 2024.

Citigroup's economists pointed out in a report to clients that "the monetary policy committee's interest rate cut cycle is entering a more difficult stage. The reversal of energy prices and the significant rise in labor costs indicate that inflation will rebound - we believe the inflation rate in April will reach 3.5%. This is happening amid a deteriorating labor market.