Bank of England Cuts Rates, Signals More Reductions Amid Trade Deal

The Bank of England reduced its interest rate to 4.25% from 4.5% on Thursday and Governor Andrew Bailey indicated that interest rates will decrease gradually throughout the year. The nine-member committee reached a divided decision that demonstrates their worries about global trade war effects on UK economic growth. Bailey praised the UK-US tariff agreement because it indicates positive developments for worldwide trade reconstruction as well as the recent UK-India trade deal. The Bank of England stated that a trade war would decrease UK inflation through Chinese cheap goods diversion. The interest rate reduction provides 600,000 tracker mortgage holders with £29 in monthly savings and fixed-rate mortgage holders can expect reduced renewal expenses since average two-year rates stand at 5.14%. The Bank of England will maintain a careful stance regarding future rate adjustments because of the unpredictable global economy caused by Trump’s tariffs. The new trade agreement between the US and UK will reduce pressures on major exports such as cars and steel which will support economic stability while the Bank faces inflation and growth difficulties.