Former Bank of England rate-setter Charlie Bean thinks the central bank should slash interest rates by half a percent at the meeting next month due to the Donald Trump's tariff crusade.
The former BoE deputy governor said he thinks the Monetary Policy Committee (MPC) should cut the base rate to 4.0% at the 8 May meeting.
US President Trump’s import duties have created uncertainty that is likely to slow investment and curb consumer spending, Bean said.
“I used to be a hawk,” he told the Guardian, “but this is a crazy situation.”
He said the tariff policy could have deep effects on the UK economy, and the MPC should respond more forcefully than markets are currently pricing in.
At the moment, traders are betting on a quarter point cut next month, 25 basis points, with around 50bps of further cuts by the end of the year to take the base rate to 3.75%.
Another former BoE rate setter, David Blanchflower, said the MPC should not even wait until May and ought to hold an emergency meeting to restore confidence.