Bank of England expected to cut key UK interest rate to 4.50%

abcnews.go.com:

The Bank of England is widely expected to cut interest rates for the third time in six months later Thursday even though inflation remains above its target

LONDON — The Bank of England is widely expected to cut interest rates for the third time in six months later Thursday, even though inflation remains above its target.

Most economists think the nine-member Monetary Policy Committee will lower the bank's main interest rate by a quarter of a percentage point to 4.50%, taking it to its lowest level since mid-2023. The base rate helps dictate how expensive it is for individuals to take out a mortgage or a loan, while also influencing the returns offered by banks on savings.

Of particular interest to financial markets is what the bank's accompanying economic forecasts show and the tone of Gov. Andrew Bailey in his ensuing press briefing.

“Until now, the bank has cut at alternate meetings, but a stagnating economy and declining employment argue for more urgent action,” said Andrew Wishart, senior U.K. economist at Berenberg Bank.

The rate-setting panel is tasked with ensuring that inflation, as measured by the consumer prices index, hits a 2% target over the coming couple years or so.

Though inflation is standing at 2.5% and expected to rise in coming months, partly as a result of business tax increases from the new Labour government, most economists think it will then trend lower towards the target, hence the panel's ability to cut.

Official figures earlier this month showed a surprise decline in the inflation rate to 2.5% in the year to December, largely as a result of easing price pressures in the services sector, which accounts for around 80% of the U.K. economy.

Another potential reason for rate-setters to cut