LONDON, Feb 21 Reuters Sterling steadied on Wednesday shrugging off Britain39;s highest ever monthly budget surplus in January ahead of finance minister Jeremy Hunt39;s annual budget in March.

Britain ran a budget surplus of 16.7 billion pounds 21.1 billion in January, due to record seasonal tax inflows. This is up from 7.5 billion pounds a year earlier although below economists39; 18.7 billion pound forecast in a Reuters poll.

Analysts on Wednesday debated what the January budget surplus could mean for the Bank of England BoE monetary outlook and for the March annual budget.

Kathleen Brooks, research director XTB, said the record surplus was still lower than expected and it does not mean the UK economy is out of the woods and generating cash significantly faster than before.

Economic growth is still likely to remain sluggish, so todays data is unlikely to factor into the BoEs decision on when to cut rates. However, the question about tax cuts is now getting interesting.

But tax cuts next month won39;t likely lead to much extra consumption or inflation, she added.

The BoE is expected to cut interest rates in June, according to LSE Group.

Britain39;s public finances typically run a surplus in January, as annual income tax payments are due that month.

The longerterm picture for UK public finances remains challenging, with overall public debt up sharply as a result of the COVID19 pandemic.

Hunt wants to announce tax cuts next month in order to boost the governing…