Global Economic Uncertainty Intensifies

The Bank of England (BoE) has highlighted a significant increase in global economic uncertainty, attributing it to the tariffs imposed by United States President Donald Trump. These measures have notably decreased the prices of global equities, risky corporate credit, and commodities.

Inflation Risks on the Rise

The BoE has issued warnings about the escalating risks to inflation, projecting that the United Kingdom's inflation rate could reach 3.75% by the third quarter of 2025. In response, the Monetary Policy Committee (MPC) is anticipated to reduce the key interest rate by approximately 75 basis points by year's end.

UK Banking System's Resilience

Despite these challenges, the Financial Policy Committee (FPC) reassures that the UK's banking system possesses the necessary resilience to support households and businesses, even in scenarios where economic and financial conditions deteriorate beyond expectations.