Bank of England (BoE) policymaker Megan Greene raised concerns on Thursday about the uncertainty surrounding the potential impact of higher US tariffs on goods imports, proposed by US President-elect Donald Trump, on UK inflation. In comments reported by Reuters, Greene stated that it is unclear whether the tariffs would drive UK inflation up or down.
Key Quotes:
“None of us know exactly what those tariffs might look like. We can’t even work out which direction tariffs would push inflation, in particular in the UK and also in the euro zone to some degree,” Greene remarked.
Regarding the UK’s economic recovery, she noted, “Given the structure of the UK mortgage market in particular, I think consumption will take a while to recover, even as rates are coming down just because of the fixed terms of UK mortgages.”
Greene also expressed concerns about weak consumption in the UK and Europe, stating, “I think there could be weak consumption for a while in the UK and also across Europe, whereas the US consumer just seems to see no bounds.”
She highlighted persistent inflation in the services sector, attributing it largely to wage growth. “Services inflation, in particular, has remained stubbornly high. That’s underpinned mostly by wage growth. Wage growth has been coming down as well, but not as quickly as I would have liked,” Greene added.
Market Reaction:
As of writing, the GBP/USD pair was trading slightly higher, up 0.06% at 1.2758, reflecting minimal market movement in response to Greene’s comments.
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