BoE Sees Lower Inflation, Reeves Faces Tax Dilemma

Bank of England policymaker Megan Greene has said that U.S. President Donald Trump's tariffs are likely to lower UK inflation, citing global trade tensions and the risk of cheap goods from China putting downward pressure on prices. Greene also highlighted domestic inflationary pressures from rising wages, higher national insurance taxes, and an increase in the minimum wage. The Bank of England is now expected to lower the base rate from 4.5% to 4% over the next two months in response to easing inflation. Meanwhile, Chancellor Rachel Reeves faces increasing fiscal challenges, and some experts warn she may have to consider raising the basic rate of income tax despite her promises not to. The overall economic outlook for the UK remains complex, with external disinflationary forces counterbalanced by domestic cost pressures. Financial markets have responded to these shifting risks accordingly.