US trade with China 'will drive UK interest rate cuts and lower inflation'

CHEAP goods flooding into the UK from China will lower inflation and prompt the Bank of England to cut interest rates further, a member of the Monetary Policy Committee has said.

- Mauricio ALENCAR

Alan Taylor, considered to be the most dovish rate-setter on the MPC, warned that cheap goods flowing in from China would lower inflation over the upcoming year.

In a speech at the National University of Singapore, the external member on the MPC said exports no longer arriving in the US due to President Trump's tariff war could “now flow to other places”.

He said there was evidence to suggest trade diversion was intensifying, adding that it would lessen the “risk of a major decline in world trade”.