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.