Donald Trump’s “chaotic trade policy” has made the future path of UK interest rates significantly more unpredictable, Bank of England Governor Andrew Bailey informed MPs. He explained that while a downward trend is still anticipated, the “how far and how quickly” is now less certain.
Bailey highlighted the negative consequences of a “fragmenting world trading system” on global growth and activity, noting that this uncertainty is causing UK businesses to delay investment decisions. He expressed disappointment that the established system of trade agreements leading to lower tariffs has been “blown up.”
However, the governor continues to expect a decline in UK wage growth in the coming months, which could provide the Monetary Policy Committee with more confidence to cut rates. He projected wage settlements to be around 3.7% to 3.8% by year-end.
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Trump’s Trade “Chaos” Makes UK Rates More Unpredictable
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