The Bank of England is expected to maintain its key interest rate at 4.0 percent on Thursday, despite some analysts suggesting a surprise cut could be on the cards ahead of the UK government’s annual budget. Most experts predict the central bank will keep its main borrowing cost unchanged, given that British inflation remains above the BoE’s target.

The UK’s inflation rate currently stands at 3.8 percent, above the BoE’s target of 2.0 percent. However, this is below the central bank’s estimate that it would peak at 4.0 percent in September. The BoE’s main task is to keep Britain’s annual inflation rate in check, and its decision on Thursday will be closely watched.

Some analysts believe that a rate cut could ease pressure on the government, which is struggling with high debt and inflation. Finance minister Rachel Reeves has warned of “necessary choices” ahead of the budget, paving the way for potential tax hikes. A cut to interest rates could help reduce the cost of mortgages and business loans, as retail banks tend to pass on BoE rate cuts to their customers.

The BoE’s decision will be made independently of the UK government, and its nine policymakers will consider various factors, including the latest economic data. Britain’s economic growth slowed to 0.3 percent in the second quarter, following a 0.7 percent expansion in the first three months of the year.

The outcome of the BoE’s decision is uncertain, with some experts predicting a “close call.” The bank’s governor, Andrew Bailey, may choose to wait for the outcome of the budget or act sooner to support the economy. The decision will have significant implications for the UK economy, and its impact will be closely monitored in the coming weeks.

The UK government’s annual budget is scheduled to be presented in late November, and the BoE’s decision on interest rates will be seen as a key indicator of the country’s economic health. As the UK navigates a challenging economic landscape, the BoE’s decision will be closely watched by investors, businesses, and consumers alike.