"They raise interest rates if inflation or the economy are looking too hot and cut if the economy needs a pick-me-up or if inflationary pressures are easing and they need to rebalance to more normal rate levels. The Fed has been watching inflation like a hawk amid a sharp rise in tariffs. So far, inflation hasn't been too problematic, and its attention has shifted to the jobs market which is looking weaker."
"The focus now shifts to what the Bank of England will do with UK rates, and the consensus is that it will do nothing at today's meeting. Sticky inflation at elevated levels is a problem, meaning the Bank might feel it is prudent to continue that fight via keeping rates at relatively high levels, rather than loosening monetary policy like the Fed."
The Bank of England is due to announce its monetary policy decision, with consensus expecting Bank Rate to remain at 4%. UK inflation stayed at 3.8%, above target, which supports a cautious stance on cutting rates. The Federal Reserve delivered a quarter-point cut, shifting focus toward a weakening US jobs market. Markets reacted positively to the Fed move, boosting equities while gold and oil dipped. Elevated UK inflation increases the likelihood that the Bank of England will maintain higher rates rather than follow the Fed's easing path.
Read at London Business News | Londonlovesbusiness.com
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