On Thursday, the Bank of England reduced the main interest rate by a quarter to 4.25 percent, as the threat of US tariffs begins to influence economic growth.
This fourth reduction in the Central Bank contradicts nine months, which was widely expected by the markets, with the US Federal Reserve decision on Wednesday to freeze borrowing costs.
Meanwhile, the Bank of England’s update came shortly after Donald Trump announced an agreement with Britain on trade, the first such deal since the US President launched his global definition.
“This will be good news all the time, including the economy in the United Kingdom,” Andrew Billy, the governor of the Bank of England, told a press conference after the price decision.
“This will help reduce uncertainty,” he added.
After a regular meeting in London, the Bank of England noted that “the possibilities of global growth have weakened the result of … tariffs.”
However, the Bank of England raised its expectations for the growth of GDP in the United Kingdom this year, to one percent of 0.75 percent.
She said that the British economic product is expected to reach 1.25 percent next year, a decrease from the previous estimate of the central bank of 1.5 percent in February.
Reducing inflation
“The developments related to trade in the financial markets have generally decreased on growth,” the Bank of England added on Thursday.
Britain faces a 10 percent tariff for most of its exported goods to the United States, its second largest commercial partner after the European Union.
Billy said that reducing inflationary pressures, which helped decrease oil prices in the wake of the Trump tariff, contributed to the bank’s decision to reduce.
“The past few weeks have shown how unpredictable the global economy. For this reason, we need to adhere to a gradual and accurate approach for more price cuts.”
With the latest reduced prices by markets, investors were looking for any transformation in the language by the Bank of England’s monetary policy committee, which hinted to more discounts this year.
Yael Selfin, the UK’s chief economist in KPMG, said that the minutes of the meeting “emphasize the continuation of the cautious approach to lower the interest rates preferred by MPC members.”
Analysts said that they expect the Bank of England to maintain its current pace to mitigate, which has witnessed a decrease in a quarter of every three months since August.
The bank’s price announcement occurred in England at 11:02 GMT, two minutes after the usual, where the UK was silent to celebrate the eighty anniversary of winning on European Day.
Also Thursday, the central banks in Norway and Sweden maintained the main interest rates unchanged while the reference to future discounts was possible amid economic uncertainty.
The European Central Bank reduced borrowing costs in the euro area last month.
This story was originally shown on Fortune.com
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