The Bank of England may once again preemptively cut interest rates ahead of the Federal Reserve to support the weak economy

According to the Zhitong Finance APP, the Bank of England is expected to announce another interest rate cut this Thursday, leading the way in monetary policy easing compared to the Federal Reserve, which remains in a wait-and-see mode. In the face of sluggish domestic economic growth, the Bank of England aims to boost weak economic momentum with this move. In contrast, the U.S. economy is in a different situation. Although the U.S. GDP is projected to decline in the first quarter of 2025, the Federal Reserve is currently more cautious about rate cuts due to strong overall growth last year. Federal Reserve Chairman Jerome Powell warned on Wednesday that even if economic growth slows, inflation may still rebound, making rate cuts more difficult. The situation in the UK is the opposite. The UK economy nearly stagnated at the end of last year, and facing increasing global uncertainty, particularly external pressures from the Trump administration's large-scale tariffs, Bank of England officials believe that this uncertainty is more likely to lead to a decrease in UK inflation rather than an increase. Although both the Federal Reserve and the Bank of England initiated rate-cutting cycles last year, the Federal Reserve has paused its actions since the beginning of the year, while the Bank of England has maintained a pace of cutting rates once per quarter. Bank of England Governor Andrew Bailey has repeatedly emphasized that the approach to lowering rates will be "gradual and cautious." James Smith, an analyst at ING, pointed out: "Due to high uncertainty and persistently weak market survey data, it is almost a foregone conclusion that the Bank of England will cut rates by 25 basis points again this month. The most likely path is for the central bank to maintain a quarterly rate-cutting rhythm, and the rate-cutting cycle may last longer than the market currently expects." According to LSEG data, traders are currently betting that the Bank of England will lower the benchmark rate from 4.5% to 4.25% on Thursday, with a 90% probability of a rate cut. The market also expects that the rate may further drop to 3.5% by the end of the year, with a probability of about 40%. In February of this year, the Bank of England significantly lowered its economic growth forecast for the entire year of 2025 from the original 1.5% to 0.75%. Although the UK's inflation rate remained at 2.6% in March, well above the central bank's target of 2%, policymakers expect inflation to gradually return to the target range before 2026. At the upcoming monetary policy meeting, the Bank of England will also release an update on its quarterly economic forecasts. Notably, one member of the Bank of England's Monetary Policy Committee has previously voted multiple times in favor of faster and larger rate cuts, which has led the market to believe that there is still a possibility of a significant 50 basis point rate cut this week, although it is only about 10%