The Bank of England looks set to embark on a series of interest rate cuts this year as Donald Trump’s trade policies rock the global economy and hit the UK’s growth rate.

After remaining steadfast in their cautious approach to interest rate cuts in the face of stubbornly higher inflation, the Bank of England is now being forced to act as tariffs threaten the UK economy.

“Donald Trump’s tariffs have caused a massive reappraisal of the future path of UK interest rates,” said Laith Khalaf, head of investment analysis at AJ Bell.

“As things stand markets are focusing on the collateral damage to the UK economy rather than the potential for a trade war to ignite inflation once again. As a result, the market is now assigning a 50% chance to the base rate being 3.5% or lower by the end of this year.”

Interest rates falling below 3.5% will likely be the result of some economic pain, but lower interest rates could provide a base for future growth. Here are the FTSE 350 sectors set to take advantage of any rate cuts this year.

FTSE 350 Housebuilders

Probably the most interest-sensitive FTSE 350 sector, the housebuilders will lap up any reduction in interest rates. 

The sector has been ravaged by the higher interest environment in response to rising inflation, which has increased mortgage rates and eroded consumers’ spending power. 

Lower interest rates, and most importantly, the perception of lower interest rates in the future, will help lift activity in the property market.

It will also encourage more first-time buyers to purchase their first home – the lifeblood of the UK housing market.

“Donald Trump may not have intended to liberate UK mortgage holders from high rates, but his tariff announcements have done just that,” explained Khalaf.

“Since Liberation Day, the swap rates which stand behind mortgage pricing have fallen decidedly below 4%, and we have seen a wave of lenders offering more competitive mortgages.”

Names such as Persimmon, Taylor Wimpey and Vistry are all set to benefit from the Bank of England rate cuts. 

FTSE 350 Supermarkets 

Another heavily UK-centric sector, supermarkets are well placed to capture any improvement in consumer confidence created by lower interest rates.

Companies such as Sainsbury’s and Marks and Spencer should enjoy shoppers allocating savings on interest payments to more premium lines. 

The feel-good factor of falling mortgage rates will likely see a tick up in retail sales, which the supermarket sector and retailers generally will see the impact of in upcoming trading statements. 

Higher spending on premium lines will translate into improved margins and provide some reprieve in the bitter battle with the discounters. 

FTSE 350 Utilities

Utility companies such as National Grid and Severn Trent will enjoy a two fold benefit from lower interest rates. 

First, lower interest rates will help reduce their interest payments and help boost earnings. Utility companies take full advantage of their ability to issue debt to an army of ready, willing and able fixed-income investors, and as a result, incur substantial costs in the form of payments to bondholders. Lower interest rates mean they’ll be able to lower their coupons and reduce these costs. 

The second advantage of falling interest rates for utility stocks is the potential wave of cash coming out of bonds into equities. As interest rates fall, income-seeking investors will seek ‘bond proxy’ stocks such as utility companies that can provide reliable cash flows at a higher dividend yield than can achieve in government bonds. 

Urban mining company Majestic Corporation has today announced the successful completion of its acquisition of Telecycle Europe Limited as it expansion into the UK market gathers pace.

Majestic Corporation recycles various forms of e-waste, including chipboards, mobile phones and solar energy equipment.

The £2 million acquisition, initially announced in September 2024, will be settled through 13 monthly instalments of £150,000 beginning this month, with a final payment of £50,000 scheduled for June 2026.

Telecycle Europe, a profitable UK-based recycling business with an established supply network, has previously served as a tolling agent for Majestic Corporation.

The acquisition provides Majestic with access to Telecycle’s fully licensed and ISO-certified facility in Deeside, Wales, which handles electronic waste collection, sorting, processing, and shipping operations.

“I am delighted that the Acquisition has been successfully completed which marks a significant step forward for Majestic. This transaction not only enhances Majestic’s operational efficiency but also positions the Company for sustained future growth,” said Joe Lee, Director and CFO of Majestic Corporation Plc.

Majestic Corporation shares are over 15% higher since the turn of the year.

The FTSE 100 gained in early trade before falling back on Tuesday as investors geared up for a week of central bank action amid softening trade tensions and corporate earnings.

London’s leading index was largely flat as the recovery rally from Trump’s Liberation Day ground on with early gains.

Lows below 8,000 now seem a distant memory, with the FTSE 100 having rebounded around 1,000 points from its lowest post-tariff announcement level. Indeed, it’s just over a month since Donald Trump unleashed his tariffs on the world, and market analysts are talking about the FTSE 100 nearing all-time highs. 

“UK markets seem well-rested after the long weekend and are back this morning with a spring in their step, with the FTSE 100 up in early trading,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.

“It’s been quite the ride as the UK’s blue-chip index pushes higher, keeping one eye on that all-time high from March. Investors look to have found their rhythm, having adjusted to life with tariff headlines around every corner. Now, the focus is shifting to what’s next – and with the Bank of England expected to cut rates this week, there’s growing hope that the UK economy might finally get the boost it’s been waiting for.”

Gains were capped by ongoing tariff rumblings from the White House as investors prepared for a busy week of central bank action, which is likely to see the Federal Reserve keep rates on hold and the Bank of England cut rates.

While the Federal Reserve is expected to keep rates on hold, investors will be wary about Powell’s comments about when they may move to cut rates after taking a hawkish tone in recent deliveries. 

The defensive attributes that helped the Footsie shake off concerns around tariffs were on display again on Tuesday, with precious metals miners Endeavour Mining and Fresnillo leading the way higher as the gold price ticked up.

“Safer assets were back on the menu, with gold prices climbing to a one-week high as investors rushed to safer ground after President Trump threatened fresh tariffs,” Britzman explained.

“His latest targets include foreign-made movies and pharmaceuticals, adding to the uncertainty around global trade. All eyes are now on the Fed, with markets watching closely to see if it holds firm on rates despite pressure from the White House.

There was a noticeable element of risk aversion in the UK ahead of the Federal Reserve interest rate decision tomorrow as cyclical sectors, including banks and miners, slipped. 

Glencore was down 0.9% and Antofagasta lost 1.3%. Banks was under pressure with Barclays dropping 1.3% and Standard Chartered gave up 2%.