The slowdown in UK inflation, which has already led to four interest rate cuts by the Bank of England, continues to support the argument for further reductions, even as Donald Trump’s trade policies introduce uncertainty, according to Governor Andrew Bailey. He told MPs that rates have been cut to 4.25% since last summer.
Bailey’s comments underscore the domestic factors influencing the Monetary Policy Committee’s decisions, alongside the global trade landscape. He highlighted that businesses are reporting delays in investment due to trade barrier uncertainties.
Despite the external headwinds, Bailey maintains his expectation for a decline in UK wage growth in the coming months. This anticipated moderation in wage settlements is a crucial element that could provide the Bank with the confidence to pursue further interest rate adjustments.