Published by Global Banking & Finance Review®
Posted on June 3, 2025
2 min readLast updated: January 23, 2026
Add as preferred source on GoogleBoE's Bailey remains cautious on rate cuts amid global trade uncertainty, impacting UK's economic outlook. Interest rates were cut to 4.25%.
(Reuters) -Bank of England Governor Andrew Bailey said on Tuesday he was sticking with a "gradual and careful" approach to cutting interest rates as global trade policy turmoil increasingly clouds the outlook.
The BoE cut interest rates last month to 4.25% in a three-way split vote. It cited "heightened unpredictability" with markets in flux thanks to U.S. President Donald Trump's rapidly shifting trade war.
"I think the path (for interest rates) remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty," Bailey told parliament's Treasury Committee.
Bailey said the fragmentation of the global trade system was bad for economic growth and that it would delay business investment decisions in Britain.
"Gradual and careful remain my ... guiding line," Bailey said of his thinking on future rate cuts, adding that he would not be drawn on his intentions for the June Monetary Policy Committee (MPC).
Deputy Governor Sarah Breeden, regarded as a centrist on the MPC, told lawmakers that she thought there was a case for cutting interest rates last month even without the global trade ructions.
Breeden was one of the majority of five to vote for a quarter-point interest rate cut last month, with the governor.
But Bailey said he was more undecided than Breeden ahead of the May interest rates decision.
"You should think of the majority as having a broad church within it," Breeden said.
(Reporting by David Milliken and Suban Abdulla, additional reporting by Muvija M; writing by Andy Bruce)
Andrew Bailey stated he is sticking with a 'gradual and careful' approach to cutting interest rates amid increasing uncertainty.
The Bank of England cut interest rates last month to 4.25% in a three-way split vote, citing heightened unpredictability in the markets.
Bailey mentioned that the fragmentation of the global trade system negatively impacts economic growth and delays business investment decisions in Britain.
Deputy Governor Sarah Breeden indicated that there was a case for cutting interest rates even without the global trade issues, reflecting a more centrist view.
Bailey believes the path for interest rates remains downward, but the extent and speed of any cuts are now more uncertain due to various factors.
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