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The British trade agreement with the United States is a “good news” but still leaves the rate of effective rate higher than before Donald Trump begins to increase obstacles to American partners, said the Governor of the Bank of England.
Friday, Andrew Bailey stressed that uncertainty about trade is disturbing commercial decisions and warned that the impact of the trade war On the British economy would partly depend on the agreements of other countries with the American president.
“I must say, of course, (the British-American trade agreement) is good news in a world where it will leave the rate of effective rate higher than before all this. I think we have to keep this in mind “,” Baiey told a conference in Reykjavik.
“The impact of all this development on the commercial front on the prospects of the United Kingdom is conditional not only on the British trade agreement, but also what the rest of the world also agrees,” he added.
The BOE reduced its reference interest rate on Thursday by a 4.25% district Because he revealed forecasts that showed that the larger world trade conflict had “a fairly negative impact on the prospects of the United Kingdom,” according to Bailey.
This had been partially offset by the financial market movements that relaxed part of the pressure, he said.
On Thursday, the United Kingdom won the first agreement with the United States since Trump began to impose high prices, accepting the reductions in punitive withdrawal and steel exports, but not having reversed a 10% flat tax that applies to most goods.
“When I go around the country in the United Kingdom, companies say to me:” We will delay investments because we are simply too uncertain about what the world will look like, “added Bailey.
Two members of the BOE monetary policy committee voted for a half-point drop, while two others said the rates should be kept unchanged at 4.5%.
Bailey voted with the majority in favor of a 4.25%reduction, a level given for the last time in 2023.
On Friday, he said that there was a case for a higher half point drop due to commercial uncertainty, but that such a reduction was likely to be “out of proportion”, because inflation was mainly motivated by domestic factors.
