From Yahoo Finance: 2025-05-08 02:01:00

The Bank of England cut its main interest rate to 4.25% due to concerns about global growth impacted by Trump’s tariff policies. Inflation pressures eased, leading to the fourth rate cut since August. The decision follows Trump’s tariff announcement, but a trade deal with the U.S. offers some optimism for the U.K. economy.

Bank Governor Andrew Bailey mentioned that the global economy’s unpredictability calls for a gradual approach to further rate cuts. Trump and British PM Keir Starmer outlined details of a trade deal, with reduced levies on British autos, steel, and aluminum. Bailey remains hopeful for more agreements benefiting the U.K. economy.

Inflation is expected to rise above the bank’s 2% target due to April price increases like energy bills and tax rises. Bailey believes this rise won’t persist long-term and will return to target in two years. Unlike the Bank of England and ECB, the U.S. Federal Reserve kept rates unchanged to monitor tariff impacts on the economy.

Economists predict more rate cuts from the Bank of England in the coming months, but uncertainty remains due to the split voting on the decision. U.K. policymakers await more data on how tariffs and tax increases affect the economy before making further moves. Luke Bartholomew from Aberdeen expects at least two more rate cuts later this year.



Read more at Yahoo Finance: Bank of England cuts interest rates and welcomes word of US-UK trade deal