Bank of England policymaker Megan Greene said on Tuesday that U.S. President Donald Trump's new tariffs are more likely to lower inflation in the UK rather than drive it higher.
In an interview with Bloomberg TV, Greene explained that because Britain has chosen not to impose retaliatory tariffs, the country could benefit from a supply of cheaper goods coming from Asia and the EU, as exporters look for alternative markets. This, she argued, could create downward pressure on prices in the UK.
“The tariffs actually represent more of a disinflationary risk than an inflationary risk,” Greene noted, offering a different view from those concerned that global trade tensions would fuel price increases.
Despite this, Greene remained cautious about cutting interest rates too quickly. She pointed to domestic inflation risks driven by limited supply capacity in the UK economy, which continues to influence her restrained stance on rate reductions.
Markets now fully expect the BoE to cut rates at its upcoming meeting on May 8, especially as fears of a recession mount following the U.S. tariffs.
When asked about concerns over the independence of the U.S. Federal Reserve — after Trump’s recent criticism of Fed Chair Jerome Powell — Greene emphasized the importance of central bank credibility: “Credibility is the currency of central banks and I think independence is quite an important piece of that.”