US tariffs are the biggest change in trade policy

Bank of England (BoE) Deputy Governor Sarah Breeden gave her views on the recently announced United States (US) tariffs and their potential economic impact.

Key Quotes

• Latest developments have a material impact on economic outlook and risks.
• World has moved on significantly since March MPC meeting.
• US tariffs are biggest change in trade policy in a century.
• Very unclear what overall landscape will be for tariffs in medium term.
• Overall tariffs are likely to lower UK growth.
• Impact on inflation from US tariffs not clear cut.
• So far Sterling has not weakened due to tariffs, this could change.
• Too early to call overall impact on inflation for UK and hence appropriate monetary response to tariffs.
• Government bond yields have been volatile.
• We judge the risk of a further sharp correction to risky asset prices remains high.
• The UK banking system will still have capacity to support the economy even if conditions worsen substantially.