Doha: Deputy Governor of the Bank of England (BoE) Clare Lombardelli said that US President Donald Trump’s global tariffs on US imports will depress economic activity, adding that the impact on inflation will be more difficult to untangle for policymakers. In the first comments from a senior BoE figure since Trump’s April 2 tariffs, Lombardelli said, in an event hosted by the Resolution Foundation think-tank, that the US president’s policies were increasing uncertainty as well as affecting asset prices.
According to Qatar News Agency, the Financial Times noted that investors have hardened their bets on a series of additional UK interest rate cuts this year, with markets pricing a further quarter-point reduction in May from 4.5 percent now, and more reductions to come later in the year. Lombardelli declined to explain how Trump’s policies would affect decisions on interest rates. She said the implications for the UK would be brought together by the BoE’s Monetary Policy Committee in its May meeting.
The Bank of England should use its meeting next month to cut interest rates by at least half a percentage point to 4% in response to the financial turmoil created by Donald Trump’s trade tariffs, the former deputy governor Charlie Bean said, according to the Guardian. Bean added that an aggressive strategy is needed to combat the fallout from Trump’s tariff war, which has knocked trillions of pounds off global stock markets, undermining business and consumer confidence, noting that uncertainty over the next few weeks would force businesses to delay investments and hit consumer spending.
Another former Bank rate setter, David Blanchflower, urged the Bank to move quickly to bolster confidence and prevent an economic downturn. Chancellor of the Exchequer Rachel Reeves said the BoE had reassured her that markets were “functioning effectively” and Britain’s banking system was resilient, but that the import taxes would have major implications for the global economy.
Acknowledging the anxiety felt by many British households and businesses, Reeves stressed that they will be supported. She reiterated that her fiscal rules remained “non-negotiable”, despite growing pressure from some Labour MPs to loosen the constraints on borrowing, as she attempted to further reassure markets. Reeves confirmed that she will soon meet with the US Secretary of the Treasury Scott Bessent to discuss the details of the negotiations being conducted by the British government with the United States as part of its efforts to reach an economic agreement aimed at reducing tariffs between the two countries.