UK’s Rate Path “Remains Downwards” But Uncertain Due to Trump

The Bank of England’s governor, Andrew Bailey, confirmed that the “path remains downwards” for UK interest rates, but stressed that the specifics are now “shrouded in a lot more uncertainty” because of Donald Trump’s chaotic trade policy. He conveyed this assessment to the cross-party Treasury select committee.
Bailey elaborated on the detrimental effects of a “fragmenting world trading system,” stating its negative impact on global growth and activity. This uncertainty, he noted, is already causing UK businesses to delay investment decisions, affecting overall economic momentum.
Despite these external challenges, Bailey maintained his expectation for a decline in UK wage growth in the coming months. This anticipated moderation in wage settlements is a crucial judgment for the Monetary Policy Committee as it considers the timing and extent of future interest rate reductions.