BOE reduces interest rates from a quarter to 4.25%

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The Bank of England has reduced interest rates to a quarter to 4.25 percent, but emphasized that it was not on a pre -established path for more reductions, as it is preparing for the impact of the trade policy of the United States President Donald Trump.

The BOE monetary policy committee was divided into three ways by the decision, which is ahead of the announcement of a US-UK trade agreement That London hopes to limit the success of the rate to British exports.

Although the reduction of Thursday’s quarter had been planned, the MPC’s insistence that would retain a “gradual and careful approach” so that the rate reductions put traders promoted their bets for more type cuts this year.

“Interest rates are not in Autopilot, they cannot be,” said Andrew Bailey, the governor of BOE.

Traders now have a price in two more rates cuts this year, with about 40 percent of third probabilities, dropping 80 percent before the meeting according to the levels involved in Swaps markets.

“This is a more divided MPC,” said Sanjay Raja, an United Kingdom chief economist at Deutsche Bank. “The probability of rates cuts on the sequential back should go down to the back.”

Although most of five MPC members supported the quarter-knit reduction, two favored a larger and more semicircular reduction and two desired rates to stay at 4.5 percent.

“In general, it is a bewildered surprise,” said Francesco Pesole, a FX to Ing strategist, emphasizing that the BOE chief economist, Huw Pill, was among those who did not vote.

The pound increased above $ 1.33 after voting, placing it in a positive territory during the day.

The performance of the two -year -old golden, which moves inversely at the price and reflects interest rate expectations, increased by 0.06 percentage points to 3.87 percent.

It Bond It has been struggling with the impact on prices and economic activity of the 40 million pounds of tax increase, Chancellor Rachel Reeves announced to the October budget, as well as the uncertainty produced by the Trump tariff plans.

The Central Bank also faces the perspective of inflation in the coming months, partly driven by an increase in household invoices. In a new set of forecasts published on Thursday, BOE forecast inflation would increase 3.5 percent of the third quarter before returning to the goal of 2 % of the Central Bank by 2027.

This week’s meeting was the first since Trump’s announcement last month of world rates, which the BOE said had helped to weaken the perspectives of global growth, although he added that “it is likely that the negative impacts on the UK growth and inflation are minor.”

United Kingdom officials suggest that Thursday’s Washington Agreement may be limited in the field and focused largely on car and steel industries. Bailey said an agreement would be a “welcome” news. “It will help reduce uncertainty and this is important,” he said.

The BOE said that the GDP growth in the United Kingdom has been reduced since mid -2014, scheduled for the economy to expand 1 percent this year and a weaker than 1.25 percent expected by 2026.