Early Assessment of Tariffs' Impact on UK Inflation

Deputy Governor of the Bank of England for Financial Stability, Sarah Breeden, highlighted the uncertainty surrounding the impact of recent US tariffs on the UK's inflation rates during her statement on Thursday. She emphasized that it is "too early" to gauge the full effects, pointing to the tariffs' "material impact on economic outlook and risks."

Sterling's Current Stability and Potential Volatility

Breeden noted the sterling's resilience thus far but warned that this "could change," underscoring the dynamic nature of the situation. She described US President Donald Trump's tariffs as the "biggest change to trade policy in a century," reflecting the magnitude of the shift in international trade dynamics.

UK Banking System's Resilience

Amid these uncertainties, Breeden reassured that the UK's banking system is robust enough to "support the economy even if the conditions worsen substantially." This statement aims to instill confidence in the financial system's capacity to withstand potential economic challenges ahead.