Webcast:Too early to determine impact of tariff - BoE Breeden
Apr-10 09:45
European Central Bank+ 3
- "On the one hand, the hit to demand for UK exports from the US and the global economy more broadly. When combined with possible trade diversity effects, those are likely to lower inflationary pressures on the other hand, though, supply chain disruptions and reconfigurations could lead to increased inflationary pressures."
- "A key determinant of the overall inflationary impact will also be the response of sterling. This too is uncertain and will depend heavily on the decisions of other countries to impose counter tariffs, the evolution of the global risk sentiment and development in financial markets. More broadly, so far. Sterling has not weakened, but it could change."
- "In addition to the direct impact that tariffs can have, it's also important to consider the impact that trade policy uncertainty, and indeed broader geopolitical uncertainty can have. These uncertainties can bring a chilling effect on business and consumer behaviours weakening both activity and inflationary pressure."
- "So I would expect tariffs to lower economic activity as barriers to trade inherently weigh on global demand. But it's given all of the uncertainties, I think it's too early to call the overall impact on inflation for the UK, and hence the appropriate monetary policy response at this stage"
- "It'll depend on other countries, trade policies, the reaction of the exchange rate and the relative strength of different transmission channels, including how quickly those channels might play out. And of course, many other factors are changing too. We'll bring all this together when we put together our forecast for the May round."
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