Bank of England could signal rate cuts after Trump tariffs

The Bank of England is expected to lower interest rates by a quarter point on May 8 as US President Donald Trump's tariffs darken the global growth outlook, and some economists think the BoE will soon need to speed up its gradual approach to rate cuts.

- 

BoE Governor Andrew Bailey, speaking in Washington last week after the International Monetary Fund downgraded UK and global growth prospects, said he was taking “very seriously” the risks posed by Trump's tariffs.

A gauge of British private-sector activity sank in April to its lowest since the turmoil caused by former Prime Minister Liz Truss’ budget plans in late 2022, while US output has fallen for the first time in three years. Until now the BoE’s Monetary Policy Committee has taken what it calls a “gradual and careful” approach - cutting rates only three times since August 2024 - due to inflation pressures including strong wage growth.

This should now change, Rob Wood, chief UK economist at consultancy Pantheon Macroeconomics, said.