On Thursday, the Bank of England reduced its key interest rate by a quarter of the point to 4.25 percent, when the threat of tariffs in the United States begins to weigh economic growth.
The fourth such reduction of the Central Bank in the first nine months, which was widely expected by the markets, contrasts with the decision of the US Federal Reserve on Wednesday to freeze borrowing costs.
The renewal of the Bank of England, meanwhile, came shortly after Donald Trump announced an agreement with Britain on trade, the first such deal since the US president has launched its world tariffs.
“It will be good news all the time, including for the UK economy,” said Governor Bo Andrew Bailey at a press conference after the decision on the rate.
“It will help reduce uncertainty,” he added.
After a regular meeting in London, BE noted that “Global growth prospects were weakened as a result … tariff ads.”
However, Boe went into the forecast for the annual UK gross domestic product this year, up to one percent of 0.75 percent.
It states that next year the British economic output will reach 1.25 percent, which is 1.5 percent in February compared to the Central Bank’s preliminary estimate in February.
Weakening inflation
“Products related to trade in financial markets usually pushed growth,” Boe added on Thursday.
Britain faces 10 percent tariffs on most of its goods exported to the US, its second largest trading partner after the European Union.
Bailey said the softening of inflation pressure, which assisted oil prices as a result of the tariff tariff, contributed to the bank’s decision to reduce.
“The last few weeks have shown how unpredictable the world economy can be. That is why we need to follow the gradual and careful approach to the further reduction of the rate,” he said.
At the latest markets price, investors searched for any shift in the Boe Cutivity Committee, which hinted for further reduction this year.
The meeting protocol “emphasized a long careful approach to reducing interest rates preferred by MPC members,” said Jael Selbain, Chief Economist of the UK.
Analysts have said they expected Boe to retain their current rate of relaxation, which has been reduced by a quarter of the cut every three months since August.
The last announcement of the Bank of England took place at 11:02 GMT, two minutes than usual when the UK was silent to celebrate the 80th anniversary of the European Day.
Also on Thursday, the central banks of Norway and Sweden retained their main interest rates unchanged, while the alarm of future cuts were possible against the background of economic uncertainty.
The European Central Bank has reduced the expenses for eurozone borrowing last month.
Originally this story was presented on Fortune.com
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2025-05-08 13:01:00
Ben Perry, AFP
