Bank of England Governor Points to Trump as Source of UK Rate Uncertainty

Donald Trump’s “chaotic trade policy” is a major factor making the future of UK interest rates less predictable, according to Bank of England Governor Andrew Bailey. During a session with the Treasury select committee, Bailey stated that while a downward trend in rates is expected, the specifics are now much less clear.
The governor lamented the dismantling of long-standing trade agreements that fostered lower tariffs, calling it a system that has been “blown up.” This, he argued, has severe repercussions for the global economy and is contributing to a climate of uncertainty that is causing UK businesses to defer investment.
Nonetheless, Bailey maintained his forecast for a deceleration in UK wage growth in the coming months, which could empower the Monetary Policy Committee to enact further rate reductions. This anticipated moderation in wage settlements is a critical element in the Bank’s forward-looking monetary policy.