UK savers could see rates drop in the wake of US President Trump’s global tariffs war, according to a personal finance expert.
News Christian Abbott Audience Writer 07:39, 16 Apr 2025
A "bad news" warning has been issued for anyone with a savings account due to Donald Trump's tariffs. UK savers could see rates drop in the wake of US President Trump’s global tariffs war, according to a personal finance expert.
Myron Jobson, senior personal finance analyst at Interactive Investor, said: “The market is now predicting that interest rates will fall more quickly than previously anticipated as policymakers move to shield the stuttering UK economy from a potential downturn - a risk exacerbated by Trump’s tariff wars.
“While lower borrowing costs might come as a relief to mortgage holders, they could spell bad news for savers, who have only just started to see decent returns on their cash after years in the doldrums.”
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Mr Jobson continued: “A great deal of uncertainty still clouds the outlook for UK investors and savers. Stock market swings - both upward and downward - are all part of market volatility, which can be unsettling but is a natural feature of investing.
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"Investors should continue to avoid making knee-jerk decisions based on short-term noise and focus instead on their long-term financial goals. Maintaining a well-diversified portfolio across different asset classes, sectors, and geographies is key to weathering market turbulence.
"It’s also a good time to review investment strategies to ensure they remain aligned with your risk tolerance and time horizon.“ The Consumer Prices Index (CPI) rose by 2.6% in the 12 months to March 2025, down from 2.8% in the 12 months to February, the ONS revealed today.
"The largest downward contributions to the monthly change in both CPIH and CPI annual rates came from recreation and culture, and motor fuels, with a further large downward effect in CPIH from housing and household services; the largest, partially offsetting, upward contribution came from clothing.
Harry Mills, Director at Oku Markets commented: "The UK inflation rate eased to 2.6% in March, a greater fall than the 2.8% forecast. That's now two months of declines from January's surprise spike to 3%, but crucially, these data are before the effects of April's tax rises and any tariff-related inflationary effects.
"So, whilst this is objectively good news for the economy, the government and the Bank of England, we can't look at this trend continuing lower with any degree of certainty given the inflationary headwinds we face. The Bank of England is expected to cut interest rates to 4.25% at its next meeting on the 8th of May, and a further two quarter-point cuts are pencilled in by year-end, taking Bank Rate to 3.75%."
Rohit Kohli, Director at The Mortgage Stop commented: "Another fall in inflation will all but seal the deal on a May rate cut. With CPI now at 2.6% and core inflation slowly heading in the right direction, the Bank of England is rapidly running out of excuses to keep rates where they are. The impact of ongoing trade wars and weakening demand across key sectors is already biting UK businesses. Holding rates at these levels for much longer risks doing more harm than good.
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"A cut next month would give firms some much-needed breathing space—and offer borrowers some more relief as they roll off fixed deals in the summer." Ben Perks, Managing Director at Orchard Financial Advisers commented: "It's time for the Bank of England to get the scissors out. There's surely no other option but to cut now — the question is, by how much? Could we now be looking at a 0.5% trim? This is great news for borrowers and it’ll be great to see how swap rates and lenders react this morning."
Riz Malik, Director at R3 Wealth commented: "This solidifies the case for a base rate cut early next month. However, the Bank of England may be fearful that this fall in inflation may be temporary, halting any reduction greater than 0.25%. With rising energy costs and Trump's tariffs, future increases in inflation are likely."
