Donald Trump’s unpredictable trade policies are forcing the Bank of England to reassess the speed at which it can cut interest rates, according to Governor Andrew Bailey. He told MPs that while a downward path is expected, the “how far and how quickly is now shrouded in a lot more uncertainty.”
Bailey expressed concern that the established global system of trade agreements, which fostered lower tariffs, has been “blown up,” with serious consequences for the global economy. This disruption is directly impacting UK businesses, causing delays in investment decisions.
Despite these external headwinds, Bailey still anticipates a decline in UK wage growth in the coming months. This domestic factor could provide the Monetary Policy Committee with greater confidence to implement further rate reductions, although the global trade picture remains a significant wildcard.
