BoE's Greene: interest rates to remain key tool for UK economy

Bank of England Monetary Policy Committee (MPC) member Megan Greene emphasized that interest rates must continue to influence UK demand to control inflation. She noted the economy faces constrained growth due to persistent price pressures and supply-side limitations.

MPC member Greene stated the Committee's cautious stance on lowering borrowing costs. This comes after the Bank of England maintained rates in March, a decision Bloomberg notes was driven by mounting domestic and global uncertainty.

Officials are closely monitoring whether rising payroll costs will lead to higher prices, reduced profits, or increased unemployment in the UK. Employers now face a third major wage increase this year alongside higher payroll deductions starting this month, all while the country's economic growth remains fragile.

The US administration's unpredictable trade policy is compounding the instability. As Bloomberg reports, even the threat of potential tariffs may have a negative impact on the UK production volumes and deterring sectoral investment.