Andrew Bailey, the Bank of England governor, has indicated that Donald Trump’s “chaotic trade policy” is complicating the Monetary Policy Committee’s (MPC) decisions on UK interest rates. He informed MPs that while a downward path is expected, the speed and depth of cuts are now far more uncertain.
The governor pointed out that the established global system of trade agreements and lower tariffs has been “blown up,” leading to serious negative consequences for the global economy. This uncertainty directly impacts UK businesses, causing delays in investment decisions.
Nevertheless, Bailey still anticipates a decrease in UK wage growth in the coming months, which could provide the MPC with more room to maneuver on interest rates. He highlighted the importance of this anticipated wage moderation for future policy judgments.