Trade tariffs are widening the divergence in monetary policy paths between the US and Europe, according to some economists.
Daniele Antonucci, chief investment officer of Quintet Private Bank, said that, given “divergent economic trajectories”, the Bank of England had more incentive to cut in the near term than its US counterpart. The bank would probably reduce rates “at a faster pace” as inflation normalised, he said.
“We expect the UK to lag the US, with the risk of trade tariffs, especially to key trading partners such as the European Union, creating a headwind for growth,” Antonucci said.
Quintet expected UK growth to remain “subdued”, he added.
“This divergence in growth suggests a weak sterling in the near term,” Antonucci said.
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