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Bank of England set to cut interest rates as º£½ÇÊÓÆµ economy stumbles

The Bank of England is expected to cut interest rates this week as the º£½ÇÊÓÆµ economy continues to struggle, although the bank is likely to signal a cautious approach to the outlook

The Bank of England (Image: PA)

Market analysts anticipate a Bank of England interest rate cut this Thursday, due to growing concerns about the º£½ÇÊÓÆµ's faltering economy which are expected to override ongoing inflation worries.

The Monetary Policy Committee (MPC) is set to endorse a third rate decrease, potentially taking the benchmark Bank Rate down to 4.50 percent, as reported by .

However, a note of caution regarding the rest of the year is likely to be indicated by the rate-setters, owing to persistent economic price pressures.

"Gradualism, we think, will remain front and centre for the MPC given two-sided risks to the inflation outlook," commented Sanjay Raja, the chief º£½ÇÊÓÆµ economist at Deutsche Bank.

Projections alongside the decision are predicted to project diminished growth and elevated unemployment compared with the Bank's previous estimates in November.

At that point, growth was forecast at 1.5 percent for 2025, but experts now believe this might settle closer to one percent due to minimal economic expansion post the last summer's general election. The downturn has been attributed partially to the government's discouraging rhetoric and budgetary tax increases.

Trends indicate that consumer and business confidence remains lackluster as the new year commences, likely putting a cap on short-term growth prospects. Although anticipations suggest a softer economic landscape, revised inflation forecasts are still slated to be adjusted upwards, particularly in the near term.

Since November, energy prices have risen and the pound has weakened, increasing the cost of imports. Furthermore, surveys indicate that companies are passing on more of the costs from the national insurance increase than Bank officials had anticipated.