Bank of England Faces High-Stakes Decision Amid Stagflation Fears

The Bank of England confronts stagnant economic growth and persistent inflation as it considers interest rate cuts. Inflation remains above the target, with a likelihood of further increases. Wage growth persists despite hiring slowdown, and businesses plan price hikes to counter new tax policies. Economic growth remains elusive as government spending rises.

The Bank of England is at a critical juncture, forced to weigh the sluggish growth of Britain's economy against enduring inflation pressures as it deliberates on potential interest rate cuts in February.

Despite inflation being above the target, wage growth continues amid a downturn in hiring, while businesses plan additional price increases due to new tax measures.

With economic output stalling since mid-2024, forecasters anticipate a rebound in 2025 driven by increased government expenditure, though challenges remain with weak hiring and investment outlooks according to recent surveys.

(With inputs from agencies.)