Interest rates live: Bank of England expected to cut rate for third time this year

New tariff rates on U.S. imports, initiated under President Donald Trump‘s administration, came into effect on Thursday, marking a significant development in his reshaping of global trade.

These measures include potential tariffs of up to 200% on pharmaceutical imports and a 100% import tax on computer chips.

Significant uncertainty persists, with no agreement yet reached on tariffs for products from China.

Full details here from Elaine Kurtenbach:

George Vessey, lead macro strategist at Convera, is expecting another three-way split in the MPC voting.

But the more interesting element of the BoE’s explanation might be their guidance for what comes next, he says.

Economic growth still isn’t great, and that – plus jobs data – weighs against inflation.

“The BoE is expected to cut rates to 4.00 per cent today. However, given the mixed signals from recent economic data, we anticipate a three-way vote split, with two members favouring no change and two advocating for a more aggressive 50bps cut.

“There has not been a single unanimous vote in this cycle and this divergence reflects the tension between persistent inflation concerns and signs of economic slack.

“With the cut largely priced in, attention shifts to the committee’s forward guidance specifically, whether it will reaffirm its pattern of quarterly reductions or hint at a change in pace. The key uncertainty hanging over this meeting is the risk of a deeper deterioration in the labour market. So far, the evidence points to a gradual weakening rather than a sudden downturn. At the same time, inflation remains persistently high, especially in the services sector, adding another layer of complexity to the policy outlook.

“Overall, we expect the August forecasts to closely mirror May’s Monetary Policy Report, with only modest adjustments: inflation steady, GDP slightly higher on reduced tariff drag, and softer labour market projections.”

President Trump gave a one-week delay to his new tariff rates coming into force last week but that day has now arrived and with it comes a morning slump in the stock markets.

US stocks moved last night and Asian markets also have remained mostly strong overnight, with rises in the Shanghai, Japan’s Nikkei 225, the KOSPI in Korea and Vietnam’s VN30 – an outsized performer itself of late.

This morning however the FTSE 100 has dropped 0.2 per cent in early trading, with Germany’s DAX flat and the Euro Stoxx 50 index up 0.3 per cent.

Gordon Brown has urged ministers to hike taxes on online casinos and slot machines to cover the cost of lifting children out of poverty.

Reforms to gambling taxes could generate the £3.2 billion needed to scrap the two-child limit and benefit cap, the Institute for Public Policy Research (IPPR) said.

The think tank’s latest research said axing the policies could lift half a million children out of poverty and “reverse years of rising hardship for low-income families”.

Rachel Reeves faces an “impossible trilemma” ahead of the autumn budget and must raise taxes or tear up her flagship borrowing rules to fill a £50bn black hole left by Labour U-turns, higher borrowing and sluggish economic growth, top economists have warned.

In order to restore the £9.9bn buffer the government has maintained since last year’s Budget, the chancellor must therefore raise a total of £51.1bn.

Millie Cooke and Kate Devlin have the detail:

The MPC have a lot to weigh up before deciding whether to hold, cut or raise interest rates at any given point.

Right now, members will be considering domestic inflation as a primary factor, for sure, but also economic growth and business investment prospects, and job vacancies and unemployment.

Cutting rates are one way to stimulate economic growth by lowering borrowing costs, which can bring more business investments and hiring, more jobs, more spending power.

That’s more what the UK seems to need at present.

The base rate – currently at 4.25 per cent following cuts in February and May – impacts consumers and taxpayers through everything from their mortgages to savings, so what do experts foresee both next week and beyond?

Morning all and welcome to The Independent’s live business coverage.

Today’s main focus will be the Bank of England’s meeting later on and the MPC’s decision over interest rates.

Elsewhere we’ll keep you posted as always on the latest company news, stock market updates and everything else that affects your money matters.