Bank of England deputy governor Sarah Breeden said on Tuesday that there was a case for cutting the Bank Rate last month, even absent the international developments. She expressed confidence that the domestic disinflationary process is proceeding steadily and is likely to continue, while the UK economy is moving gradually into excess supply. The official also noted that spare capacity is emerging and the labour market is loosening. However, Breeden emphasised that future policy decisions require certainty that inflation is on track toward the BoE's 2% target.
The BoE's deputy governor also said that newly announced U.S. tariffs are expected to have a small impact on the UK economy and that the degree of slack emerging in the labour market will guide the monetary policy. Still, she acknowledged that there is uncertainty about how far and how fast to cut rates.