Bank of England’s Greene says Trump tariffs could push down inflation
"We have tariffs, and none of us have any idea what they'll look like when the dust finally settles," Greene said during a discussion with the Atlantic Council think tank on the sidelines of the International Monetary Fund's spring meeting.
The Bank of England building is seen surrounded by flowers in London. (Photo: Reuters)
Vivek Mishra works as an Assistant Editor with Eastern Eye and has over 13 years of experience in journalism. His areas of interest include politics, international affairs, current events, and sports. With a background in newsroom operations and editorial planning, he has reported and edited stories on major national and global developments.
BANK OF ENGLAND (BoE) policymaker Megan Greene said US president Donald Trump's tariffs would probably lower, rather than raise, inflation in Britain, although there were big uncertainties around the plan and the impact of a recent UK tax rise for employers.
"We have tariffs, and none of us have any idea what they'll look like when the dust finally settles," Greene said during a discussion with the Atlantic Council think tank on the sidelines of the International Monetary Fund's spring meeting.
"In my mind, the risk space has changed a little bit. So I think the risk is now on the disinflationary side. So I think that tariffs on the UK would, on net, be more disinflationary than they are inflationary," she added.
Asked about what she was watching ahead of the BoE's interest rate decision next month, Greene said she was concerned about Britain's weak productivity growth and supply-side constraints on the economy.
"There's also a big uncertainty around the implications of the budget on the economy, and particularly higher labour costs," she said.
Labour costs for British firms rose this month after chancellor Rachel Reeves' increase in social security contributions came into effect. The minimum wage also rose by almost 7 per cent.
Earlier this week, BoE Governor Andrew Bailey said the central bank needed to take the risk to growth from global trade tensions "very seriously", given Britain's reliance on foreign trade and investment.
Financial markets have assigned a 96 per cent probability to the BoE cutting rates by a quarter-point to 4.25 per cent at its next announcement on May 8.
Greene also said weaker growth in Britain's economy should help bring inflation back to the BoE's 2 per cent target. She said the labour market was weakening only slowly but added that wage growth should come down.
Workers are engaged at their sewing stations in a garment factory in Savar, on the outskirts of Dhaka, on April 9, 2025. (Photo by MUNIR UZ ZAMAN/AFP via Getty Images)
BANGLADESH, the world's second-biggest garment manufacturer, aims to strike a trade deal with the US before Donald Trump's punishing tariffs kick in next week, said the country's top commerce official.
Dhaka is proposing to buy Boeing planes and boost imports of US wheat, cotton and oil in a bid to reduce the trade deficit, which Trump used as the reason for imposing painful levies in his "Liberation Day" announcement.
"We have finalised a draft reciprocal trade agreement," Mahbubur Rahman said on Wednesday (3), adding the government was "hopeful of reaching a win-win agreement".
Rahman said a meeting between officials from both countries was slated for July 8, with the US representing 20 per cent of Bangladesh's ready-made garments exports.
Textile and garment production accounts for about 80 per cent of exports in Bangladesh and the industry has been rebuilding after it was hit hard in a student-led revolution that toppled the government last year.
Trump hit Bangladesh with 37 per cent tariffs in his April 2 announcement, which is more than double the 16 per cent already placed on cotton products.
He suspended the tolls' introduction until July 9, as he did with other global trading partners, though a baseline 10 per cent levy was kept in place.
Bangladesh exported $8.36 billion worth of goods to the US in 2024, while imports from there amounted to $2.21bn, according to the Bangladesh Bank and the National Board of Revenue.
"As part of the initiative to reduce the trade gap, the government already decided to import a large volume of wheat, purchasing 14 aircraft from US manufacturer Boeing, buying cotton and more oil and gas from the US farms," Rahman said.
He did not give further details on the exact timing or extent of the proposed deals, but said the government had held around 28 meetings and document exchanges in a bid to reach an agreement.
Interim leader Muhammed Yunus spoke to US secretary of state Marco Rubio on Monday (30) and told him Dhaka was "working with your officials to finalise a package of measures to effectively respond to president Trump's trade agenda".
Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the national platform of the garment makers, expressed concerns about any deal.
"The already enacted additional 10 per cent tariff is hitting our exporters, and if it goes further, we might lose US buyers," he warned.
But Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said he was optimistic.
"We are hopeful of a positive outcome on the US tariff before July 9," he said.
"There will be a temporary problem if the US administration does not revise the tariff. But it will largely and ultimately hit the US buyers, as they would have to buy goods at higher prices."
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The Canary Wharf business district including global financial institutions in London.
THE COST of UK government borrowing fell on Thursday, partially reversing the rise seen after Chancellor Rachel Reeves became emotional during Prime Minister’s Questions.
The yield on 10-year government bonds dropped to 4.55 per cent, down from 4.61 per cent the previous day. The pound also recovered slightly to $1.3668 (around £1.00), though it did not regain all its earlier losses.
The movement followed comments from Prime Minister Sir Keir Starmer, who told BBC Radio 4's Political Thinking with Nick Robinson that he worked “in lockstep” with Reeves and said she was “doing an excellent job as chancellor.”
Analysts told the BBC that markets appeared to back Reeves, with concerns that her departure could lead to a weakening of fiscal discipline. “It looks to me like this is a rare example of financial markets actually enhancing the career prospects of a politician,” said Will Walker Arnott of Charles Stanley. “If the chancellor goes then any fiscal discipline would follow her out the door and that would mean bigger deficits.”
Mohamed El-Erian of Allianz warned that risk premiums may persist. “I suspect that we will see some moderation, but we will not go back to where we were 24 hours ago,” he said.
Reeves, who became tearful during PMQs after a U-turn on planned welfare reforms that left a £5bn gap in her financial plans, said on Thursday she had been upset due to a personal issue. A Treasury spokesperson also confirmed it was a personal matter.
Reeves told the BBC that the welfare changes would be reflected in the Budget and reaffirmed her commitment to fiscal rules. Jane Foley of Rabobank said Reeves now faces difficult choices but added, “investors do place a lot of store in political stability.”
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Customers shop for 'Kolhapuri' sandals, an Indian ethnic footwear, at a store in New Delhi, India, June 27, 2025. REUTERS/Adnan Abidi
INDIAN footwear sellers and artisans are tapping into nationalist pride stoked by the Prada 'sandal scandal' in a bid to boost sales of ethnic slippers with history dating back to the 12th century, raising hopes of reviving a struggling craft.
Sales are surging over the past week for the 'Kolhapuri' sandals that have garnered global attention after Prada sparked a controversy by showcasing similar designs in Milan, without initially crediting the footwear's origins.
After viral photos from a fashion show drew criticism from Indian artisans who make the sandals - named after a historic city in Maharashtra state - Prada was forced to acknowledge that its new open-toe footwear was inspired by ancient Indian designs.
"Prada 0: Kolhapur 1," said an Instagram post by e-commerce website Shopkop, whose founder Rahul Parasu Kamble's open letter to Prada pointing out the footwear is "soaked in tradition" was reshared 36,000 times on social media.
"I saw the controversy as a way to promote Kolhapuri," said Kamble, 33, who has seen sales of sandals he sources from local artisans touch 50,000 rupees ($584) in three days, five times the average.
Social media has been abuzz in recent days with criticism and sarcastic memes, with politicians, artisans and a trade body demanding due credit to Indian heritage.
Prada has said it will arrange follow-up meetings with artisans. In a statement on Tuesday (1), it added the Italian group intends to make the sandals in India in collaboration with local manufacturers, if it commercialises them.
India's luxury market is small but growing, with the rich splurging on Lamborghini cars and pricey watches. Prada does not have a single retail store in India and its products are usually reserved for the super rich - its men's leather sandals start retailing at $844 (£667), while Kolhapuris can be priced as low as $12 (£8.92).
But linking of the Prada name to the Kolhapuri sandals, which are made by around 7,000 artisans, is providing a business opportunity for some.
Mumbai-based Ira Soles is running new Facebook and Instagram advertisements which proclaim its $32 (£24) "Tan Handcrafted Kolhapuris just walked the ramp at Prada ... Limited stock. Global spotlight. Own a piece of what the world is applauding.".
E-commerce website Niira is offering up to 50 per cent discounts on its Kolhapuri slippers it says are "rooted in tradition". Its sales of $18 (£13.5) sandals, that looked like the one Prada showcased in Milan, have tripled, founder Nishant Raut said.
"Why can't an Indian Kolhapuri brand become as big as a Birkenstock," he said.
Handmade in small factories, Kolhapuri sandals, or chappals as they are called in Hindi, are often paired with Indian attire. Similar designs are sold in big outlets of Bata India and Metro Brands, and also on Amazon and Walmart's Flipkart.
In 2021, India's government said the sandals could achieve $1 billion (£728m) a year in exports. Though latest estimates are not available, artisans say the business has struggled as consumers increasingly opt for more fashionable, upmarket footwear.
Still, the Prada controversy is breathing new life into a craft that Lalit Gandhi, president of Maharashtra's main industry lobby group, says is "a dying art". Gandhi said he is in talks with Prada to develop a co-branded, limited-edition sandal.
Kolhapur craftsmen Ashok Doiphode, 50, is pinning hopes on a Prada boost. He hand-stitches sandals for nine hours daily but can sell a pair for just Rs 400 (£3.5)
"If big companies like Prada come, craftsman like me can get a good price."
(Reuters)
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The Canary Wharf business district including global financial institutions in London.
THE UK economy expanded at its fastest pace in a year during the first quarter of 2025, driven by a rise in home purchases ahead of a tax deadline and higher manufacturing output before the introduction of new US import tariffs.
Gross domestic product rose by 0.7 per cent in the January-to-March period, the Office for National Statistics (ONS) said, confirming its earlier estimate. This was the strongest quarterly growth since the first quarter of 2024.
Growth for March was revised up to 0.4 per cent from a previous reading of 0.2 per cent, according to the ONS.
The increase followed growth of just 0.1 per cent in the fourth quarter of 2024. However, GDP fell by 0.3 per cent in April from March, a decline affected by one-off factors.
Outlook for Q2 and pressure on budget targets
The Bank of England expects the economy to grow by about 0.25 per cent in the second quarter of 2025.
Finance minister Rachel Reeves is hoping for stronger growth to reduce pressure to raise taxes again later this year in order to meet her budget goals.
Thomas Pugh, chief economist at RSM UK, said weak consumer spending and hiring data in recent weeks likely reflected a short-term reaction to an employer tax increase and the US tariffs, many of which have now been suspended.
"Now that uncertainty has started to recede, consumer confidence is rebounding, and business surveys point to the worst of the labour market pain being behind us," Pugh said.
A separate survey published on Monday showed employer confidence in Britain had reached a nine-year high, with businesses more optimistic about the economy.
Interest rate cuts expected; energy prices a risk
The Bank of England is expected to cut interest rates two more times in 2025, which could support household spending.
However, a renewed rise in energy prices caused by further conflict in the Middle East could add pressure to the already slow-growing economy.
According to Monday’s ONS data, household expenditure grew by 0.4 per cent in the first quarter, revised up from an initial estimate of 0.2 per cent. The increase was led by spending on housing, household goods and services, and transport.
The UK property market saw increased activity ahead of the 31 March expiry of a tax break for some homebuyers.
Savings fall, manufacturing rises
Households drew from their reserves to support spending, with the saving ratio falling for the first time in two years. However, at 10.9 per cent, it remained high.
Manufacturing output rose by 1.1 per cent in the first quarter, ahead of the US tariff increase in April, compared with the final quarter of 2024.
The ONS also reported that the UK’s current account deficit widened to 23.46 billion pounds in the January-to-March period, up from just over 21 billion pounds in the previous quarter.
RUSSIAN oil major PJSC Rosneft Oil Company is in early discussions with Reliance Industries to sell its 49.13 per cent stake in Nayara Energy, an Indian energy company that operates a 20-million-tonnes-per-year oil refinery and 6,750 petrol pumps, sources familiar with the matter said.
The deal, if finalised, would see Reliance overtake state-owned Indian Oil Corporation (IOC) to become India’s largest oil refiner. It would also provide Reliance with a significant expansion in fuel retailing, where it currently holds a relatively small presence.
The talks, however, are still at a preliminary stage and may not lead to a final agreement, primarily due to differences in valuation, according to three sources with direct knowledge of the matter.
Top Rosneft executives have visited India at least three times in the past year, including stops in Ahmedabad and Mumbai, to hold talks with potential buyers.
Rosneft is seeking to exit Nayara, which it acquired in 2017 (then Essar Oil) for approximately $12.9 billion (around £10.2bn).
Western sanctions have made it difficult for the Russian firm to repatriate earnings from its Indian operations. A suitable buyer, ideally with significant international revenues or foreign ownership, would be able to process cross-border payments more easily.
Reliance, a major exporter of petroleum products, fits that profile. However, a spokesperson for the company said: “As a policy, we do not comment on media speculation and rumours. Our company evaluates various opportunities on an ongoing basis.”
UCP Investment Group, a major Russian financial firm, which holds a 24.5 per cent stake in Nayara, is also looking to sell. The remaining shareholders include Trafigura Group (24.5 per cent) and a group of retail investors. Sources said Trafigura may also consider exiting the company if a deal is struck, possibly on the same terms.
Rosneft had initially valued Nayara at $20bn (approximately £15.8bn), a figure considered too high by most interested parties.
Adani Group declined the opportunity, citing both the high price and its existing agreement with TotalEnergies to limit future investments in fossil fuels.
Saudi Aramco has also expressed interest in Nayara, which would support its long-term goal of securing a downstream presence in India, the world’s fastest-growing oil market. However, Aramco too finds the valuation steep. Talks between Rosneft and Aramco reportedly have not advanced beyond initial engagement.
Nayara may make the most strategic sense for Reliance. The company already operates two massive refineries at Jamnagar, Gujarat, with a combined capacity of 68.2 million tonnes per year, located near Nayara’s facility in Vadinar. Acquiring Nayara would help Reliance surpass IOC’s total refining capacity of 80.8 million tonnes per year and significantly increase its retail footprint.
Nayara’s 6,750 fuel stations contrast sharply with Reliance’s 1,972 outlets in a market with over 97,000 petrol pumps. “Oil refining alone is not profitable — unless you have marketing, you can’t make money,” said one industry official.
While Rosneft has reportedly reduced its asking price to $17bn (around £13.4bn), the valuation remains a sticking point for interested parties. No formal offers have been announced, and Rosneft has yet to issue an official statement on the matter.