The Bank of England is widely expected to follow in the Federal Reserve’s footsteps by leaving interest rates unchanged on Thursday. 

The U.K.’s inflation rate is closer to the central bank’s goal than it has been for the past two years. The big question is whether the BOE can start thinking about cutting rates and, if so, when.

This “meeting should mark the beginning of a slow pivot towards a cutting cycle that should start in August and proceed slowly,” said strategists at Bank of America. 

Clues will come in the BOE’s updated projections, which will be published with the decision. Since the last round of estimates in November, inflation has come in below forecasts, while economic growth has been weaker. 

But inflation is still about double the BOE’s 2% goal and unexpectedly bounced higher in December, which could make policymakers reluctant to ease policy any time soon. At the central bank’s meeting six weeks ago, three of the nine-member Monetary Policy Committee said they favored raising rates further. 

The BOE has kept its benchmark rate at 5.25% since August. Before that, the bank had raised rates at 14 consecutive meetings, starting in December 2021, lifting borrowing costs from near zero. Inflation peaked at 11% in October 2022 and has been broadly slowing since.

The Fed kept its key interest rate at 5.25%-5.5% on Wednesday. Chairman Jerome Powell said that while slower price gains are “very good news … inflation is still too high and ongoing progress in bringing it down is not assured.”

The European Central Bank, responsible for monetary policy in the 20 countries that share the euro, kept its key rate unchanged last week.

Markets are currently pricing in the first Fed cut in May, with reductions from the ECB and BOE expected later in the year.

Write to Brian Swint at [email protected]