Bank of England chief Andrew Bailey has warned Britain faced ‘a lot of economic uncertainty’ as interest rates were left on hold.
The Bank pointed to the turmoil sparked by US trade tariffs as well as subdued activity in the UK where businesses have been hammered by Labour’s tax hikes.
Yesterday, Bailey said rates were on a ‘gradually declining path’ but officials would pay close attention ‘at how the global and domestic economies are evolving’ before making any further moves.
The Bank’s monetary policy committee (MPC) voted 8 to 1 to keep the benchmark rate at 4.5 per cent.
Markets now expect two more cuts this year. But the Bank warned that ‘elevated uncertainty’ would persist after President Donald Trump imposed tariffs on goods from China, Mexico and Canada, and global duties on all steel and aluminium – sparking tit-for-tat retaliation from some countries.
It said a trade war risked dampening UK growth with the impact on inflation uncertain as UK business surveys ‘continue to suggest weakness in growth and particularly in employment intentions’.
Uncertainties: Bank of England boss Andrew Bailey said interest rates were on a ‘gradually declining path’
That came a day after the US Federal Reserve warned of ‘turmoil’ created by Trump as it cut its US growth forecast and raised the inflation outlook.
The MPC meeting was the last before the Chancellor’s Spring Statement next week, which is expected to see the Office for Budget Responsibility cut growth forecasts.
That will open up a multibillion-pound hole in public finances that she is expected to fill by slashing spending.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Read More: Bank of England boss warns Britain faces ‘a lot of economic uncertainty’ as rates are