Bank of England Sticks as Fed Twists

As expected the Fed cut US interest rates in September, with a 0.5% reduction which brings the rate down to a range of 4.75-5%. For the first time since 2005 it was not a unanimous decision as one committee member dissented, however it is not expected to be the last cut this year. Fed chair Jerome Powell has signalled for many weeks that this is now the direction of travel, with the faltering job market a greater concern than inflation at present.

The Bank of England, which cut rates earlier this year, kept rates at the same level as inflation had crept up very slightly in recent months. Governor, Andrew Bailey, is maintaining his line that rates will come down but gradually, and not to the near zero levels which we saw four years ago. Many observers expect another cut later in the year, assuming inflation does not continue to rise.

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