The growing geopolitical tension caused by the US means that the Bank of England's progressive approach to rate reduction is “no longer effective,” said Catherine Mann, a member of the Monetary Policy Committee.
Mann's comments come when US President Donald Trump decides whether to promote a 25% tariff on goods imported from Canada and Mexico, or a 10% tariff on Chinese imports. 
President Trump has previously suggested that he could potentially impose tariffs on countries charging VAT, putting the UK at risk of a £24 billion blow over two years.
The UK's VAT rate is 20%, and the US sales tax is relatively low.
“The pre-estimation of a gradual approach to monetary policy is no longer effective, especially due to the substantial volatility from financial markets from cross-border outflows,” a member of the External Monetary Policy Committee said in a speech at the Reserve Bank of New Zealand last night.
Previously, Hawkish Mann and Dove Swati Dhingra were backed last month when rate setters voted 7-2 to cut their base fees to 0.25%, cutting them by 4.5%. Both voted for a 0.5% reduction. Currently, inflation is at 3%, surpassing the bank's 2% target.
At the time, Bank of England Governor Andrew Bailey said the central bank would adopt a “gradual and cautious” approach to further rate reductions.
However, Mann said factors such as the prospect of increasing global tariffs and tensions against the Ukrainian-Russian war, which could lead to an increase in European defence spending, mean that a progressive approach to base speed reduction is no longer useful.
She said: “It was promulgated when financial flows were small and the market was more stable as monetary policy strategies were prioritized.”
But Mann now pointed out from the beginning of the year that “international outflows dominate UK domestic data and signals from monetary policy action.”
She added that a more “activist monetary policy strategy” is needed to send rate setters to markets that have a reliable response to the new environment.
Mann said: “The massive cuts like the ones I voted for at the latest conference will reduce this turbulence with the aim of communicating policy stances more effectively and impacting the economy.”
Yesterday, the European Central Bank cut interest rates from 2.75% to 2.5% for the sixth time in nine months in an attempt to strengthen economic growth in the eurozone. Eurozone inflation is 2.4%, surpassing the 2% target.
