Economy LIVE: Rachel Reeves in Washington for crisis talks amid meltdown

A Bank of England policymaker said US trade tariffs are more likely to push down on UK inflation than to push it up, but that there are risks on both sides.

Speaking to Bloomberg, Megan Greene said: “The tariffs represent more of a disinflationary risk than an inflationary risk.”

However, she added: “There’s a ton of uncertainty around this, but there are both inflationary and disinflationary forces.”

She said potential outcomes like export substitution would likely push inflation down, while “trade diversion from other countries that are trying to find a new home for their markets, that also pushes down on inflation”.

Meanwhile, “a re-patterning of supply chains can push up on inflation”, while trade fragmentation more widely “reduces potential growth, that tends to be inflationary”.

Rachel Reeves's attention is focused on protecting the national finances, encouraging growth and securing a deal with US - but charities are warning Labour faces a legacy-defining disaster for British children.Major charities have joined forces to warn of the impact of keeping the two-child benefit cap in place.They state: “If it is not scrapped, the stark reality is that child poverty will be significantly higher at the end of this parliament than when the government took office, making this the first time a Labour government would leave such a legacy, and the number of children living in poverty will be at its highest since records began.”

Senior Political Correspondent Christian Calgie has previewed the Chancellor's Washington trip.

He says Rachel Reeves is to make the case for free global trade at the International Monetary Fund’s spring meeting in Washington DC, as she hopes to get a trade deal with the US over the line. The Chancellor has jetted out to the United States as Britain hopes to ramp up the pressure to get a deal signed with President Trump.

Ms Reeves will urge the White House to slash its tariffs, with UK trade officials hoping that an FTA might see some relief for Britain’s car, steel and pharmaceutical manufacturers. However there is little hope that any trade deal would see the blanket 10% tariffs lifted from the rest of Britain’s economy.

Read more about the visit here.

Concern that President Trump may be trying to fire Jerome Powell, the chairman of the interest rates-setting Federal Reserve to have hit the value of the dollar. Sterling is now at its highest level since September ($1.342).

Wall Street weakened on Monday as investors worldwide become more sceptical about US investments because of President Donald Trump’s trade war and his criticism of the Federal Reserve, which are shaking the traditional order.

The S&P 500 sank 2.4% in another wipe out. That yanked the index that’s at the centre of many 401(k) accounts 16% below its record set two months ago.

The Dow Jones Industrial Average dropped 971 points, or 2.5%, while losses for Tesla and Nvidia helped drag the Nasdaq composite down 2.6%.

The falls mean pension funds across the world fell in value.

Perhaps more worryingly, US government bonds and the value of the US dollar also sank as prices retreated across US markets.

It’s an unusual move because Treasurys and the dollar have historically strengthened during episodes of nervousness.

This time around, though, it’s policies directly from Washington that are causing the fear and potentially weakening their reputations as some of the world’s safest investments.

While UK ministers have said talks on a deal remain ongoing, figures in the Trump administration have cast doubt on their prospect of success.

Although Mr Trump rowed back from his initial announcement, instead instituting 10% tariffs on all countries except China, his senior economic adviser Kevin Hassett has suggested this is a “baseline” which would require an “extraordinary deal” for the president to go below.

Mr Trump himself has said he is in “no rush” to negotiate exceptions to the tariff regime due to the revenues he claimed the charges were generating.

As well as seeking to make progress on a US deal, Ms Reeves is also expected to discuss improving trading relations with other nations – something she has previously said the Government is keen to do.

Earlier in April, she hosted India’s finance minister for talks on a potential free trade agreement and trade is expected to feature heavily at a UK-EU summit in May.