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Andrew Bailey, governor of the Bank of England, stops before the start of the press conference of the Monetary Policy Report at the Bank of England on February 6, 2025 in London, England.
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Even if the United Kingdom is not the “direct recipient” of the possible tariffs imposed by the United States, “it will have an effect,” said the governor of the Bank of England, Andrew Bailey on Thursday.
If tariffs are announced, their effect on global economic growth and inflation should be considered, Bailey told Steve Sedgwick of CNBC.
“Now I think that in terms of growth in the world economy, if this will lead to a fragmentation of the world economy, that is not good for growth,” Bailey said. “The impact on inflation is more ambiguous, because it depends on what other countries do in response, it depends on what are the consequences of these actions and reactions for trade,” he added.
The president of the United States, Donald Trump, warned that the United Kingdom could be online for tariffs, but has also indicated a The agreement could be potentially beaten. Trump announced tariffs on goods imported from China, Canada and Mexico last week. Planned Tasks Pause about imports of the last two economies.
Bailey on Thursday also pointed out that the United Kingdom “does not have a substantial commercial imbalance with the United States”
The United States was the largest commercial partner in the United Kingdom in the year until September 2024, which represents more than 17% of the United Kingdom’s total trade, according to official data.
Depending on the figures you see, the two countries have a small trade deficit either surplus. However, the important thing for Trump, which has expressed dissatisfaction when the United States exports less to a country than matters, is that the numbers are almost balanced.
Bailey also pointed out that services are a large part of the United Kingdom trade, that classic tariffs do not affect the same way as other goods.
A decision of BOE ‘gradual’ and ‘careful’
The England Bank reduced its reference interest rate at 25 basic points to 4.5%on Thursday. Seven members of the Nine Force Monetary Policy Committee (MPC) voted in favor of the cut, while two members voted for a reduction of 50 larger basic points.
After the announcement, Bailey said at a press conference that the MPC expected to be able to further reduce interest rates as disinflation advanced, but noted that these decisions would be made on a meeting meeting.
In statements to CNBC, Bailey described the cut as “careful” and “gradual”, and added that the central bankers were using those words “very deliberately.”
The word “gradual” referred to the disinflation process, while “careful” was a wink to “risks and uncertainties,” he said.
– Chloe Taylor and Holly Ellyatt of CNBC contributed to this report.
