BoE to Accelerate Rate Cuts Amid Tariff Turmoil

The Bank of England is expected to cut interest rates amid global economic concerns fueled by U.S. tariffs under President Trump. Economists see the BoE adopting a faster approach to rate reductions as economic uncertainty persists, with possible back-to-back cuts anticipated in May and June.

The Bank of England is poised to lower interest rates as early as May 8, influenced by global economic uncertainties aggravated by U.S. President Donald Trump's tariffs. Economists suggest that the BoE may need to speed up its approach to rate cuts to counteract these economic pressures.

During a recent discussion in Washington, BoE Governor Andrew Bailey expressed concerns about the risks posed by Trump's tariffs, echoing sentiments after the International Monetary Fund's downgrade of UK and global growth forecasts. April saw a decline in UK private-sector activity, a downturn reminiscent of the aftermath of former Prime Minister Liz Truss' budget plans, while U.S. output experienced its first decline in three years.

Historically cautious, the BoE's Monetary Policy Committee has only enacted three rate cuts since August 2024, attributed to inflation pressures and wage growth. However, economic analysts now predict more frequent cuts, with rates possibly dropping from the current 4.5% to 3.75% by year-end. These developments highlight the growing economic challenges facing the BoE.

(With inputs from agencies.)