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 on various countries and industries. These measures have led to a decrease in the prices of global equities, risky corporate credit, and commodities.

Inflation Risks on the Rise

In its latest report, the BoE cautioned that the current circumstances have elevated the risks to inflation, with projections indicating that inflation in the United Kingdom could reach 3.75% by the third quarter of 2025. Additionally, the bank anticipates that the Monetary Policy Committee (MPC) may reduce the key interest rate by approximately 75 basis points before the year's end.

UK Banking System's Resilience

The Financial Policy Committee (FPC) remains confident in the UK's banking system's ability to support households and businesses, even in scenarios where economic and financial conditions deteriorate more than expected.