Former BOE Head asks to cut the half point to 4% at the next MPC meeting – Staking Strategy
Former Lieutenant Governor Charlie Bean said the Bank of England should cut a half point to combat the “crazy situation” caused by Donald Trump’s trade tariffs.
The former policymaker believes strong measures are needed to deal with the consequences of the U.S. presidential tariff war, which has defeated global stock markets and undermined business and consumer confidence.
“The problem is not only tariffs, but these actions create huge uncertainty, delaying the purchase and investment decisions of businesses and consumers,” Bean said in the Guardian.
On May 8, the chances of a quarter-point reduction dropped from 4.5% to 95% this morning at the next meeting of the Bank Policy Committee.
That’s 50% of April before “Liberation Day” when Trump made plans to combat U.S. trade imbalance with us.
Traders are still considering that policymakers will be forced to conduct two more base tax rates by December this year before August.
As Bean suggested, by the end of the year, the base rate will bring the base rate to 3.75%, i.e. if the commission makes a half-point cut next month, it will increase the base rate to 3.75%. Bean has worked for the bank for 14 years since 2000.
But David Blanchflower, another former tax rate setting, further said Threadneedle Street should hold an emergency meeting before the next scheduled May meeting to consider a significant reduction in borrowing costs. Since 2006, he has worked at MPC for three years.
“You need to really care about the confidence of consumers because when it drops, you stare at the recession,” Blanchflower said.
The United States imposes at least 10% tariffs on imports from all countries dealing with the United States.
The UK faces a 10% tariff, while the EU has a 20% tariff, and if China has a 104% import tax, retaliation charges are required.
MPCs are surprised by the high-speed movement, but this doesn’t happen often.
The most significant change in speed in recent years was in November 2008, when policymakers lowered 150 basis points as the global financial crisis progressed.
Deutsche Bank said MPC needs to see “sharp decline in survey activity indicators” from its agents along with other data such as PMI and CBI reports.
The German bank said exchange rate setters also need to see signs of “over-tightening under financial or credit conditions” and in its May decision “there is more evidence of cooling in the labor market”.
“In view of uncertainty surrounding the global economy and the prospect of tighter credit and financial situations, we still believe that the “strong” reduction rate reduction rate remains high, and even if we may see a 50bps reduction fee reduction of one or two votes, we think that the reduction rate and financial situation remains high.”
However, investment banks are above consensus estimates and are expected to drop four times by the end of the year.
Earlier today, Prime Minister Rachel Reeves told Parliament: “This morning, I talked with the governor of the Bank of England [Andrew Bailey]He has confirmed that the market operates effectively and that our banking system is resilient. ”
