(Reuters) – The Bank of England (BOE), as expected, lowered its main key rate of 25 base points on Thursday, despite internal disagreements while US customs duties weigh on global economic growth.

The key rate of the BOE is now 4.25%, compared to 4.5% previously.

The BOE Monetary Policy Committee (MPC) voted by 5 votes against 4 in favor of this rate reduction. Two members, Swati Dhingra and Alan Taylor, voted for a greater reduction of 50 base points while chief economist Huw Pill and Catherine Mann spoke in favor of an unchanged rate.

This is the first monetary policy decision of the British central bank since the implementation of substantial customs duties by Donald Trump last April. Following this announcement, the International Monetary Fund had lowered its growth forecasts for most major economies, including the United Kingdom.

The BOE said it said that the increase in American customs duties could weigh on British economic growth and put pressure on inflation, while stressing that the prospects remained very uncertain.

“In recent weeks have shown how unpredictable the global economy can be. This is why we have to keep a prudent and gradual approach in our rate reductions,” said Boe Andrew Bailey Governor.

For the past year, the reductions in the BOE guiding rates have been at the same level as those of the Federal Reserve (Fed), which maintained its unchanged rates yesterday, but lower than the European Central Bank.

The BOE said it did not have a predefined plan for its interest rates, simply continuing to adopt a cautious approach. The report of Reunion shows that the impact of global trade tensions must not be overestimated “. Some investors had anticipated an acceleration of drops in rates on the rest of the year.

Taking into account the situation in place on April 29, the BOE estimates that American customs duties will reduce the size of the British economy by 0.3% in three years and would help inflation to find its target level more quickly.

Later this Thursday, the United States and the United Kingdom are expected to announce an agreement to reduce some of the American from British exports. The BOE nevertheless said that two-thirds of the estimated impact on British growth were due to the broader effects of customs duties on the global economy, rather than those which directly target British goods.

Before the publication of the BOE decision, the financial markets anticipated a reduction in British interest rates to almost 3.5% by the end of the year against 3.75% and 4% before the customs announcements of Donald Trump.

(Written by David Milliken, William Schomberg and Suban Abdulla, Pauline Foret, edited by Augustin Turpin)

Copyright © 2025 Thomson Reuters