Trump Tariffs Could Ease UK Inflation, Says Bank of England’s Megan Greene

Bank of England policymaker Megan Greene has suggested that U.S. President Donald Trump’s proposed tariffs are more likely to reduce inflation in Britain rather than increase it, although she cautioned that considerable uncertainties remain.

Speaking during a discussion with the Atlantic Council on the sidelines of the International Monetary Fund’s spring meeting, Greene noted, “We have tariffs, and none of us have any idea what they’ll look like when the dust finally settles.” She added, “The risk space has shifted a little bit. I now think the risk is on the disinflationary side. Tariffs on the UK would, on net, be more disinflationary than inflationary.”

Turning to the Bank of England’s upcoming interest rate decision next month, Greene highlighted concerns over Britain’s sluggish productivity growth and ongoing supply-side constraints. She also pointed to uncertainties stemming from the recent UK budget, particularly the rise in labour costs after Finance Minister Rachel Reeves’ hike in social security contributions and a nearly 7% increase in the minimum wage.

Earlier this week, BoE Governor Andrew Bailey emphasized the need for the central bank to take the threat of slowing growth from global trade tensions seriously, given Britain’s dependency on international trade and investment.

Markets are currently pricing in a 96% chance that the BoE will lower its key interest rate by a quarter-point to 4.25% at its next policy announcement on May 8.

Greene added that Britain’s slower economic growth should assist in bringing inflation back down to the Bank’s 2% target. While the labour market is weakening only gradually, she expects wage growth to ease as well.