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Bank of England Cuts Rates, Eyes US-UK Trade Deal

Marco Sorenson by Marco Sorenson
May 8, 2025
in Economics
Bank of England Cuts Rates, Eyes US-UK Trade Deal

FILE - The Bank of England is pictured in London, on Aug. 1, 2024. (AP Photo/Alberto Pezzali, File)

The Bank of England decreased interest rates by 0.25% to 4.25% on Thursday because of Trump’s tariff policies which threaten global growth. Governor Andrew Bailey stated that inflation eased but he stressed the need for a “gradual and careful” approach to future interest rate reductions while the Monetary Policy Committee members divided into two groups with one member advocating for a 0.5% reduction and the other two supporting no change. The Bank of England’s Governor Andrew Bailey expressed support for both the UK-US trade agreement and the UK-India trade deal because they will lower UK product tariffs and help restore international trade. The Bank of England predicted that a trade war would decrease UK inflation through the diversion of affordable Chinese products. The interest rate reduction benefits 600,000 tracker mortgage holders who will now save £29 per month while fixed-rate mortgage rates (two-year at 5.14%) show a downward trend. The decision occurred after Trump made his April tariff announcement which put most tariffs on hold for 90 days. The UK trade agreement provides relief to essential exports which will help maintain economic stability during ongoing worldwide uncertainties.

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