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3w ago

Bank of England to Lower Rates as Trade Tensions Weigh on UK Economy

The Federal Reserve is expected to hold rates steady this week, while the Bank of England prepares for a quarter-point cut amidst tariff-driven uncertainty.

The Federal Reserve building is seen in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts/File Photo
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Jeremy Siegel in 2014.
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Overview

  • The Bank of England is anticipated to reduce its base rate by 0.25 percentage points to 4.25% on May 8, marking its fourth rate cut in nine months.
  • UK inflation has eased, with CPI falling to 2.6% in March and services inflation dropping to 4.7%, creating space for monetary easing.
  • US tariffs, introduced by President Trump, are projected to dampen UK growth, with the IMF lowering its 2025 UK growth forecast to 1.1%.
  • Federal Reserve officials are expected to maintain the current 4.25%-4.50% policy rate this week, though markets predict rate cuts later in the year.
  • Diverging views within the Bank of England highlight debates over inflation risks, with some members warning of persistent domestic pressures while others see tariffs as disinflationary.