BoE’s Greene: Unclear how Trump tariffs would move UK inflation

Bank of England (BoE) policymaker Megan Greene said on Thursday that it is still unclear whether higher US tariffs on goods imports proposed by U.S. President-elect Donald Trump would raise or lower UK inflation, per Reuters. 

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.” 

“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.”

“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.”

“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.”

Market reaction

The GBP/USD pair is trading 0.06% higher on the day at 1.2758, as of writing.