Bank of England policymakers have cut interest rates by a quarter point to 4.25% to cushion the UK economy against the impact of Donald Trump’s trade war.
The widely expected move from the Bank’s monetary policy committee (MPC), its fourth cut since last August, should lead to cheaper mortgages for homeowners.
It follows a run of downbeat data on the UK economy, with surveys suggesting consumer and business confidence is weakening.
At the MPC’s February meeting, when it last cut rates, the committee had signalled a “cautious and gradual” approach to future reductions, warning that inflation was likely to rise sharply in the coming months.
But Trump’s dramatic “liberation day” tariffs announcement in early April unleashed significant uncertainty, prompting forecasters to downgrade their expectations for the UK and the global economy.
Donald Trump is expected to announce a framework for a US-UK trade deal later on Thursday.
But the chancellor, Rachel Reeves, has made clear that even if the UK secures a carve-out, the country would still be affected by the global slowdown expected to result from the trade war.
As well as monitoring the impact of trade policy, the Bank’s rate-setters have been assessing how Reeves’s £25bn increase in employer national insurance contributions, which came into force last month, is affecting businesses.
More details soon …
