Interest Rates Held by Central Banks in West

Last week, the European Central Bank’s (ECB) decided to hold interest rates in Europe at 4.0% pa,.  This ended 10 consecutive rate increases in Europe with ECB Chair Christine Lagard appearing cautious in the hope the holding rates as they are will continue to gradually reduce inflation, which was 10.3% pa at its peak but is now down to 4.3% pa.

• The next ECB rate decision is on 14^th December 2023.

Yesterday it was the turn of the Federal Reserve in the USA.  Chair of the ‘Fed’, Jerome Powell held rates at a 22 year high in a range of 5.25% to 5.50% pa and suggested that the US economy was steady with growth at 4.9% pa but they would take time to assess additonal economic data over the coming month before any decisions next month.  At 3.7% pa. US inflation is lower than Europe but still went up last month and with nearly 500,000 new jobs and lower unemployment, the Fed is reluctant to pile further pressure on mortgage borrowers and business loans with more interest rates.

• The next Fed rate decision is on 13^th December 2023.

Today was the turn of the Bank of England:  The BoE kept interest rates at 5.25% pa, as forecast by so many.  Unemployment is up and food price falls gave the Monetary Policy Committee (MPC) some 'wiggle room' in that inflation is slowing and will continues towards the BoE’s 2% target next year.  That said the MPC suggests that the BoE is not being complacent as inflation is still too high at 6.7% pa and they “will be watching closely to see if further increases in interest rates are needed”.

• The next BoE rate decision is on 14^th December 2023.

Comment

No suprises then as the ECB, the Fed and the BoE all keep interest rates the same in November although we do think that now the economic downturn will start to hurt with longer term higher interest rates until the summer or autumn of 2024.  The continued higher interest rates will hurt mortgages, property prices, business growth with many businesses likely to fold in 2024 as well as unemployment increasing as job losses mount. 

No economic joy in 2024, so you best make your own joy.