Global Economic Uncertainty Intensifies

The Bank of England (BoE) has highlighted a significant increase in global economic uncertainty, attributing this trend to the tariffs imposed by United States President Donald Trump. These measures have notably reduced the prices of global equities, risky corporate credit, and commodities, according to the Financial Policy Committee's (FPC) recent report.

Inflation Risks on the Rise

With these developments, the BoE has raised concerns over heightened risks to inflation, projecting that the inflation rate in the United Kingdom could reach 3.75% by the third quarter of 2025. In response, the Monetary Policy Committee (MPC) is anticipated to decrease the key interest rate by approximately 75 basis points before the year concludes.

UK Banking System's Resilience

Despite these challenges, the FPC remains confident in the UK's banking system's ability to support both households and businesses, even in the face of unexpectedly severe economic and financial conditions.