The Bank of England (BoE) is set to keep its key interest rate at 4.5% in its upcoming meeting, as economic challenges mount both domestically and internationally. Uncertainty surrounding Donald Trump’s trade tariffs and a sluggish UK economy have led policymakers to adopt a cautious stance.

Recent economic data reveals stagnation, with slow growth and rising business concerns over upcoming tax changes. The BoE previously warned that inflation could temporarily rise to 3.7% due to energy costs, exceeding its 2% target.

Governor Andrew Bailey has highlighted potential threats from global trade tensions, warning that tariffs could reduce disposable income for UK citizens. Meanwhile, divisions within the BoE’s Monetary Policy Committee persist. February’s meeting saw a surprise vote for a larger rate cut from traditionally hawkish member Catherine Mann, raising questions about the bank’s future policy direction.

The decision also precedes the UK Treasury’s “Spring Statement” on March 26, where Chancellor Rachel Reeves faces pressure over fiscal policy. With borrowing costs rising and economic forecasts expected to be downgraded, further adjustments to spending and taxation could be on the horizon.