IMF Urges Bank of England to Cut Interest Rates Again This Year

The International Monetary Fund has called on the Bank of England to reduce interest rates twice more this year, citing concerns about the UK's economic growth and increasing uncertainty about global trade policies. The IMF's suggestion comes as the organization upgrades its global growth forecasts, expecting the global economy to grow 3pc this year and 3.1pc in 2026. However, it warns that larger fiscal deficits, increased risk aversion, and trade policy uncertainty could trigger renewed volatility in financial markets.

Key Takeaways:

• The IMF recommends that the Bank of England cut interest rates twice more this year, with the current rate of 4.25pc being too high to support economic growth.
• The organization warns that mounting debts, uncertainty about Donald Trump's trade policies, and potential higher tariffs could trigger renewed turmoil in financial markets.
• The IMF upgrades its global growth forecasts, expecting the global economy to grow 3pc this year and 3.1pc in 2026.
• The organization expects the UK economy to grow at 1.2pc in 2025 and 1.4pc in 2026, driven by a growth spurt at the start of the year as companies rushed to send goods to the US to avoid higher tariffs.
• The IMF suggests that the US Federal Reserve has limited scope to reduce borrowing costs, putting Chairman Jerome Powell on a collision course with President Trump.

Statistics:

• 3pc: expected global growth this year
• 3.1pc: expected global growth in 2026
• 1.2pc: expected UK growth in 2025
• 1.4pc: expected UK growth in 2026
• 4.25pc: current Bank of England interest rate
• 2: expected rate cuts by the Bank of England this year
• £20 bn: potential tax increase on working people to balance the books
• April 2: "liberation day" when Donald Trump threatened tariffs on US imports

Sources:

• International Monetary Fund (IMF)
• Reuters
• The Guardian
• The Bank of England