MNI BRIEF: Uncertainty Up, Tariff Impact Tricky - BOE Bailey
MNI (LONDON) - Economic uncertainty has risen, highlighting the unknown response of businesses to a rise in employer taxation, the potential for global trade fragmentation and the trickiness of assessing the impact of US tariffs on inflation, Bank of England Governor Andrew Bailey said Wednesday.
Asked at an FT event about the interest rate outlook Bailey said "there's uncertainty everywhere, frankly. And if anything, I would say the level of uncertainty is rising at the moment," with US trade policy a key international factor and domestically the rise in employer National Insurance (NI) contributions announced in the October Budget clouding the outlook,.
On higher National Insurance contributions for employers, Bailey said that companies could spread the hit between prices, wages, employment levels and profit margins and he said that things should be clearer by the spring. He said hiking tariffs moves traded prices but its inflation impact "also depends on how other countries react to them (and) depends on how exchange rates react to them as well. So the effect is not at all straightforward to predict."