The Bank of England maintained its primary interest rate at 4.5 percent on Thursday, cautioning about "significant economic unpredictability," primarily due to US President Donald Trump's tariff policies.

The Bank of England maintained lending rates at 4.5%, choosing not to reduce them for a fourth time in seven months, even though UK economic growth remains sluggish due to persistently high inflation levels.

On Wednesday, the US Federal Reserve and the Bank of Japan kept their interest rates unchanged, whereas Switzerland’s central bank reduced its rates on Thursday.

"Currently, there is significant economic uncertainty," stated Bank of England Governor Andrew Bailey in an official release.

The BoE stated in the minutes from a routine policy gathering that "uncertainty regarding global trade policies has escalated."

Various geopolitical instabilities have become more pronounced, and global indications of financial market volatility have escalated.

The central bank stated, "The German government has unveiled plans for substantial reforms to its financial regulations."

Bailey also mentioned that the BoE believes "interest rates are expected to follow a gradual decline."

Experts suggested this signaled, as anticipated, that the bank plans to reduce rates at its upcoming routine monetary policy meeting in May.

'Work to do'

On Thursday, official figures revealed that although British unemployment stabilized at the beginning of the year, wage increases continued to significantly outpace the yearly inflation rate.

At the same time, the Consumer Prices Index jumped more than expected to 3.0 percent in January, which is above the BoE's two-percent target.

Meanwhile, the UK economy surprisingly contracted in January.

"Since the summer, we have experienced three interest rate reductions; however, more efforts are needed to alleviate the burden of living costs," stated Finance Minister Rachel Reeves in response to the recent Bank of England decision, which was supported by eight out of the nine members of the Monetary Policy Committee, including Bailey.

Over the Atlantic, the Federal Reserve decided on Wednesday not to change interest rates and cautioned about rising economic uncertainties as they aim to steer through an economy unsettled by President Trump’s fluctuating imposition of tariffs.

Policy makers decided to keep the main borrowing rate of the U.S. central bank within the range of 4.25 percent to 4.50 percent.

They likewise reduced their growth projection for this year and increased the inflation estimate, while still anticipating two interest-rate decreases in 2023 -- consistent with their earlier prediction from December.

This was different from the European Central Bank, which at the beginning of this month lowered interest rates to support the faltering Eurozone economy.

Nevertheless, the ECB indicated that monetary loosening might soon come to a close as it cautioned about increasing economic uncertainties. At the same time, it acknowledged the anticipated significant increase in expenditure aimed at enhancing Germany’s defense and infrastructure, which poses a potential surge in inflation risk.

In Britain, the Bank of England recently cut its prediction for the nation’s overall economic output this year by half, citing global uncertainties due to U.S. tariff threats and declining business confidence in the UK.

This occurred after the central bank reduced its main interest rate by 0.25 percentage points in February, providing some relief to the UK government, which is grappling with constrained public funds.

Prime Minister Keir Starmer's Labour administration this week announced contested cuts to disability welfare payments, hoping to save more than £5 billion ($6.5 billion) by 2030 as it looks to shore up Treasury coffers.