Determining the appropriate level for interest rate cuts to stimulate economic growth without triggering inflation remains a challenge for policymakers. Expectations for rate cuts are increasing in the eurozone and the US following Trump's tariff announcement. Anticipated rate cuts by the Bank of England have risen from two to three, with the possibility of another cut early next year. The former MPC rate-setter predicts a total of four more rate cuts, potentially bringing the base rate to 3.5pc. The ongoing trade war may lead to a slight inflationary impact, prompting the Bank of England to expedite rate cuts as economic activity weakens. The outlook for global economic growth has dimmed due to escalating trade tensions.

Former MPC members believe that a stronger pound and falling oil prices could provide room for central banks to lower rates to bolster economic growth. The focus now shifts to supporting economies amidst growing calls for increased government borrowing to fund various sectors. The repercussions of Trump's trade policies are evident as economists fear a global recession is looming. Central bankers are facing the daunting task of sustaining economic stability while navigating the impact of tariffs and global uncertainties on inflation and growth. The article concludes by highlighting the challenges central banks face in responding to the evolving trade dynamics and economic shocks.