Global Trade Disruptions Cloud UK Rate Cut Prospects, BoE Head Warns

Andrew Bailey, the governor of the Bank of England, has warned that the global trading system, significantly impacted by Donald Trump’s policies, is making it harder to predict the future of UK interest rates. He told MPs that the long-established pattern of lowering tariffs has been “blown up,” leading to serious consequences for the global economy.
This disruption translates into tangible effects for UK businesses, with some reporting a halt in investment due to the uncertainty surrounding trade barriers. Bailey emphasized that such fragmentation negatively impacts world growth and activity, directly influencing the confidence of UK enterprises.
While acknowledging market volatility stemming from rapidly changing US trade policy, Bailey still anticipates a slowdown in UK wage growth. This domestic factor remains a key consideration for the Bank’s Monetary Policy Committee as it weighs future interest rate adjustments, potentially paving the way for further cuts.