Bank of England's Greene: US Tariffs Likely to Lower UK Inflation

Bank of England policymaker Megan Greene indicated that recent US trade tariffs are more likely to reduce UK inflation than increase it, although she emphasized significant uncertainty and acknowledged both inflationary and disinflationary risks. Greene explained that mechanisms such as export substitution and trade diversion—where countries seek new markets in response to tariffs—are likely to ease inflationary pressures in the UK. She also noted that the UK's decision not to impose reciprocal tariffs could make it a destination for less expensive goods from Asia and the EU. However, she warned that restructuring supply chains and broader trade fragmentation could reduce growth and potentially add to inflation. Greene maintained a cautious stance on rate cuts due to ongoing concerns about domestic inflation pressures, particularly from supply constraints and wage growth.