Global Economic Uncertainty Intensifies

The Bank of England (BoE) has highlighted a significant increase in global economic uncertainty in its latest Financial Policy Committee (FPC) report. This surge is attributed to the tariffs imposed by United States President Donald Trump on various countries and specific industries, which have adversely affected global equities, risky corporate credit, and commodities.

Rising Inflation and Interest Rate Cuts

Amid these developments, the BoE has warned of heightened risks to inflation, projecting a rise to 3.75% in the UK by the third quarter of 2025. In response, the Monetary Policy Committee (MPC) is expected to reduce the key interest rate by approximately 75 basis points by the year's end.

UK Banking System's Resilience

The FPC remains confident in the UK's banking system's ability to support households and businesses, even in the face of significantly worse-than-expected economic and financial conditions.