‘Bank of England urged to slash UK interest rates to a minimum of 4% next May amid tidal waves of tariff tumult’

The Bank of England should reduce interest rates by at least 0.5 percentage points to 4% in response to the financial turmoil caused by Donald Trump’s trade tariffs, according to former deputy governor Charlie Bean. He believes that an aggressive strategy is necessary to combat the fallout from Trump’s tariff war, which has caused massive declines in global stock markets and undermined business and consumer confidence. Bean, who was also the chief economist of the Office for Budget Responsibility (OBR), said that uncertainty in the next few weeks would force businesses to delay investments and hit consumer spending. He argued that a much bigger cut was needed than financial markets expected, citing the 1.5 percentage point cut in November 2008 when the markets expected a 0.25 or 0.5 percentage point cut. David Blanchflower, another former Bank rate setter, said that Bean’s intervention recognized the significance of the economic shock but called for an emergency meeting to consider a deeper reduction in borrowing costs. Financial markets have priced in a 0.25 percentage point cut to 4.25% in May and two more cuts of the same size this year, reducing UK interest rates to 3.75%. Trump has imposed a minimum 10% tariff on imports from all countries that trade with the US, and more onerous charges on various countries. The OBR forecasted that a similar global trade dispute would reduce the UK’s national income by 1% and extend a 12-month period of stagnation.

Source: https://www.theguardian.com/business/2025/apr/08/bank-of-england-uk-interest-rates-tariff-turmoil