PULSE POINTS:
❓What Happened: The Bank of England reduced its base interest rate from 4.5 percent to 4.25 percent.
👥 Who’s Involved: The Bank of England, economist Patrick Minford, U.S. President Donald J. Trump, and the United States Federal Reserve.
📍 Where & When: Thursday, May 8, 2025, in the United Kingdom.
💬 Key Quote: “I would have welcomed more [of a cut to base rates] actually… At the moment, the priority is to try and stop the recession gathering pace,” said economist and former Margaret Thatcher advisor Patrick Minford.
⚠️ Impact: The British rate cut may not be sufficient to prevent a recession in Britain, but could increase pressure on the U.S. Federal Reserve to finally enact a rate cut of its own.
IN FULL:
The Bank of England has announced a reduction in its base interest rate from 4.5 percent to 4.25 percent, a move that has been met with mixed reactions from economists and the public. While this decision is seen as beneficial for many homeowners, Patrick Minford, a prominent economist and former advisor to the late Prime Minsiter Margaret Thatcher, has expressed concerns that the cut may not be enough to avert an impending recession. Conversely, yesterday, the United States Federal Reserve declined to cut rates at all, raising concerns that the American central bank is asleep at the wheel.
“I would have welcomed more [of a cut to base rates] actually,” Minford said in an interview, warning: “At the moment, the priority is to try and stop the recession gathering pace.”
As in the U.S., the British inflation rate has continued to fall, decreasing from 2.8 percent in February to 2.6 percent in March. However, in both countries, the inflation rate remains just above their respective central bank targets. In the U.S., President Donald J. Trump has steadily increased political pressure on Federal Reserve Chairman Jerome Powell to usher in a cut to interest rates and inject liquidity into the American economy.
Following the signing of a bilateral trade agreement between the U.S. and the UK on Thursday, President Trump again pushed “Too Late” Powell to cut rates, likening a cut to “jet fuel” and suggesting Powell’s reluctance to lower interest rates is politically motivated.
Despite growing concerns over a potential global recession driven by a deflationary demand collapse, the U.S. labor market has remained resilient under President Trump. The National Pulse reported on Thursday that unemployment claims are continuing to fall in the U.S., beating expectations, suggesting that recession fears may be overblown.
