Auto Amazon Links: No products found. Blocked by captcha.
Vishala Sri-Pathma
BBC business reporter
According to the International Monetary Fund (IMF), the Bank of England might slash interest rates three more times this year due to the UK facing higher-than-expected inflation. The IMF foresees UK inflation to hit 3.1%, the highest among advanced economies worldwide, primarily driven by increased expenses such as energy and water bills. Also, the IMF stated that the UK’s economic growth will fall short of previous estimates, projecting a 1.1% increase in 2025 instead of the initial forecast of 1.6%, attributing it to the global repercussions of US trade tariffs. This announcement coincides with a gathering of top economic policymakers in Washington for the IMF’s spring meeting.
Despite the downgraded outlook for the UK economy, it remains ahead of the prospects for France, Italy, and Germany. Factors such as Trump’s tariffs, a significant rise in borrowing costs, and inflation erosion all contribute to this revised economic forecast. IMF chief economist Pierre-Olivier Gourinchas indicated that the IMF anticipates three additional interest rate cuts by the Bank of England this year, following a 0.25% reduction in February. Nevertheless, Trump’s tariffs could potentially subdue the speed of UK price inflation as commodities are redirected away from the US. The IMF foresees UK inflation tapering down to 2.2% by 2026, aligning closely with the Bank’s 2% inflation target.
Responding to these predictions, Chancellor Rachel Reeves emphasized that the IMF still anticipates stronger economic growth in the UK compared to other major European nations in 2025. Reeves underscored the shifting global landscape, stating her intention to advocate for British interests and advocate for equitable and free trade during her visit to Washington this week. She is scheduled to meet with US Treasury Secretary Scott Bessent to present Britain’s case for a trade deal with the US aiming to decrease or eliminate American tariffs on British goods.
“Tariff ‘test'”
Mr. Gourinchas highlighted that the global economy continues to bear the lingering effects of the substantial shocks experienced over the past four years. He emphasized that the global economy is once more undergoing significant trials. The IMF observed the most considerable downgrade in the growth forecast for the US among advanced economies due to the uncertainty caused by trade tariffs. US growth is now projected to be 1.8% this year, a reduction from the IMF’s earlier prediction of 2.7% in January. President Donald Trump’s policies have led to a series of tariff announcements this year, creating a growing trade dispute between the US and China, with both countries imposing high tariffs on each other’s goods. Trump’s aim with these tariffs is to boost the sale of American-made products, increase tax revenues, and drive substantial investments within the country
Read the full article from The BBC here: Read More
Auto Amazon Links: No products found. Blocked by captcha.