BoE to keep rates on hold as global uncertainty mounts

LONDON: The Bank of England (BoE) is likely to keep interest rates on hold on Thursday and stick to its mantra of only gradual moves ahead as it grapples with the fallout from US President Donald Trump’s trade war and mixed news on Britain’s economy.

All 61 economists polled last week expected the BoE to leave its benchmark interest rate on hold at 4.5 per cent, with the next cut likely in May, followed by further reductions in August and November. While there has been limited news on Britain’s economy since the BoE’s last rate cut on February 6, Trump’s stop-start announcements of tariffs on US allies have thrown financial markets into a tailspin and raised questions about the outlook for inflation around the world.

Share prices have fallen dramatically over the past two weeks, especially in the United States, wiping out more than $5 trillion in value in US markets over concerns that Trump’s policies could lead to a US recession.

By contrast, the announcement of a 500-billion-euro infrastructure and defence investment plan by Germany’s leading political parties boosted the value of many manufacturers.

“Global developments around tariffs and defence spending have mixed implications. We suspect the BoE won’t want to rush to judgement on what it all means for the UK economy, with no concrete news yet,” Elizabeth Martins, senior UK economist at HSBC, said. — Reuters