BoE's Breeden says interest rate implications from US tariffs unclear

LONDON (Reuters) - Bank of England Deputy Governor Sarah Breeden said the impact on UK inflation from U.S. President Donald Trump's trade tariffs - and the implications for interest rates - remained unclear even if Washington's new policies were likely to lower growth.

"Overall, tariffs are likely to lower UK growth," Breeden told an MNI Livestreamed Connect event on Thursday.

"Expenditure switching by US consumers away from UK goods, combined with weaker global demand due to potential counter tariffs and supply chain disruptions would be expected to weigh on UK activity," she said.

"I think its too early to call the overall impact on inflation for the UK and hence the appropriate monetary policy response at this stage."

Breeden said there had been a significant global shift since the Monetary Policy Committee's last meeting in March - when it kept borrowing costs on hold - and the latest developments had a material impact on the economic outlook and risks.

The chance of a quarter-point rate cut at the BoE's next scheduled meeting on monetary policy in May was seen at about 84% on Thursday, according to rates futures pricing.

On Tuesday, another BoE deputy governor, Clare Lombardelli, also said it was too soon to judge the inflation impact for Britain from Trump's tariffs.

Trump said on Wednesday he would temporarily lower the duties he had just imposed on dozens of countries but further ramped up pressure on China.

(Reporting by David Milliken; Writing by Suban Abdulla; Editing by William Schomberg)

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