The Bank of England has warned that Donald Trump’s tariffs will raise risks to global growth and higher inflation.
In the record of the last meeting of its financial policy committee, led by governor Andrew Bailey, the Bank said that there was also a risk that the tariffs could worsen financial market shocks.
On the direct impacts of Trump’s tariffs, the Bank said:
This had contributed to a material increase in the risks to global growth and a weakening of the central outlook, as well as increased uncertainty over the outlook for inflation globally.
But the committee, which is set up to look for risk to financial market stability, also highlighted that risks have increased. It said:
Heightened global uncertainty and perceived higher economic risk could translate into tightened financing conditions for business, as well as impacting exit opportunities for investors in an already subdued IPO market. Such developments had the potential to interact with the vulnerabilities identified by the FPC around high leverage, valuations uncertainty, credit market interconnections and the exposure of insurers. In addition, these vulnerabilities could amplify shocks to highly indebted UK corporates or investor confidence and potentially affect UK financial stability.
