The Bank of England hoped to reduce rates as the United States War increases growth

Keep –Logs informed with free updates

Simply register —vos at UK interest rate Myft Digest: Delivered directly to the inbox.

It is likely that the Bank of England will reduce the interest rates of the United Kingdom to a quarter of 4.25 percent this week, which means that reductions will be reduced as the uncertainty triggered the overall war of the President of the United States, Donald Trump, increased the trade war.

It BondThe Monetary Policy Committee will announce its latest rate decision on Thursday, in a context of concern for the potential of US erratic policy on import taxes to derail the global economy.

BOE governor Andrew Bailey are likely to depress the UK’s economic activity. But this will be the first time that policymakers have exposed their opinion on how Trump’s policies can affect inflation and the prospects for rates.

Investors think that a quarter -week rate reduction is almost certain, with the potential that one or two MPC members break with the majority and vote for a larger percentage reduction of 0.5 points.

They bet that the BOE will be made later with three more cuts, reaching its reference rate up to 3.5 percent at the end of the year, below 5.25 percent when the policy of last summer began to loosen.

This would be a faster rhythm of loosening than the MPC that he said when he last published the forecasts in February, saying he was planning to take a “gradual and careful” approach to reduce the cost of loans.

The economists responded by Reuters are more cautious: they expect the BOE to reduce the rates to 3.75 percent at the end of the year. But they also believe that policymakers can now be ready to have a more activist position.

“We hope that (the MPC) is clear that the balance of risks has been moved to a less inflationary perspective,” Jack said, meaning, Barclays economist, adding that the MPC could “open the door to a June cut”, even avoiding any explicit commitment.

The data published from the MEMC in February will give their nine members a certain security that inflationary pressures are in accordance with their expectations.

The growth of GDP at the end of the year has been shown much stronger than policymakers, although perspectives are darken.

In the meantime, inflation of the price of consumption, which fell more than expected to 2.6 percent in March, has been below the BOE February forecasts, including service prices.

Salary growth, 5.9 percent in the three months until February, is still too strong for the BOE hobby, but the job market has softened.

All this could decrease the concern that the MPC stated in February: that the blockages of the offer of the economy of the United Kingdom could explain why the activity was stagnant, but the growth of prices is still sticky. The main concern will now be how global trade disorder changes the prospects for inflation.

“The MPC still has a work job to suppress inflation,” said Rob Wood, chief economist in the United Kingdom of Consultant Pantheon Macroeconomics. “The question is to what extent Donald Trump’s rates will do this job for the MPC.”

Until now, rate services have been circumspect, although Megan Greene, one of the most puzzled members of the Committee, said last week that the rates were more likely to be disinflatational than inflationary.

Sandra Horsfield, an Investig’s economist, said that with regard to trade, “almost everything has pointed to the lower UK inflation pressure.”

This is partly due to the intense uncertainty about commercial policy already weighing the activity, making companies bewildered by new investments and consumers who have an expense.

It also reflects the weakest dollar expectations and the weakest world energy prices and the probability that Chinese exporters will cut off prices as they are looking for alternatives in the North -America markets.

Analysts expect the MPC to make their thinking clear updating the scenarios he uses to show how he considers the balance of risks to inflation.

The Committee said in March that he wanted to explore two scenarios: one in which global and domestic uncertainty was weighed more in demand and that strong salary growth continued to feed prices. But I could also use them to explore the various ways in which commercial friction could be played.

The BOE will still be concerned about the potential of pricing prices for persecution, especially taking into account the short -term collection of inflation that awaits the back of the strong increases last month in the regulated prices of the utility.

But Elizabeth Martins, HSBC Senior Economist, said they could now indicate that he was open to accelerating the pace of cuts if necessary.

“Attention reduces the two ways. There is a risk of doing too little, as well as a risk of doing too much,” he said.

Amy Borrett Data Viewing