Three more Bank of England rate cuts expected in 2025 — Bloomberg

According to Bloomberg, investors and economists are raising forecasts for monetary policy easing by the Bank of England due to escalating trade tensions created by US President Donald Trump. Markets are already pricing in three additional rate cuts before the end of the year following the announcement of record tariffs.

Bank of England Governor Andrew Bailey notes the dual effect of tariffs on inflation. On the one hand, the restrictions could lead to higher prices for imported goods, adding to inflationary pressures. On the other hand, the slowdown in global trade and redirection of goods flows can reduce overall prices in global markets, having the opposite effect.

At the same time, Bloomberg Economics experts believe that the consequences of the US trade policy will restrain inflation in the medium term. In their opinion, members of the Monetary Policy Committee now have more reasons to gradually reduce rates.

Thomas Pugh from RSM UK, analyzing the situation, warns of possible stagnation of the British economy. He lowers GDP forecasts by 0.2–0.5% and expects three additional rate cuts in 2025, given the negative impact of trade restrictions.