Bank of England and Federal Reserve Hold Interest Rates on Uncertainty

Federal Reserve

Last night the Federal Reserve chose to hold interest rates within a 4.25%-4.50% pa range amid trade tariff, economic and political turmoil.

This is the 4^th consecutive month that the US has held rates despite forecasts for slower growth, higher unemployment and expectation that inflation will climb higher than the current 2.4% pa (still above 2% pa target).  Trade tariff negotiations will play a big part on whether inflation climbs or not and therefore, the future of US interest rates.

Bank of England

In the UK, inflation figures were announced by the Office for National Statistics yesterday, with CPI still at 3.4% pa (after last month’s mistake at 3.5% pa – should have been 3.4% pa).  This left little room for the Bank of England to manouvre and as expected base rates were held at 4.25% pa.

The Bank of England Monetay Policy Committee voted by a majority of 6:3 to hold rates, so there was still some swing to reducing rates.

Comment

Economic and political turmoil looks set to continue with tariffs talks unknown and news conflcits breaking our seemingly every month, with Israel/Iran the latest to add to global conflict.

Given all of the above, we cannot see interest rates coming down until at least the end of the summer and even then, there are too many variables to be certain.