In recent months, official interest rates have been cut worldwide as inflation has fallen sharply from the peak of over 9% following the end of the Pandemic and Russia’s invasion of Ukraine, which drove up global food and energy prices, see chart 1. Global price inflation has fallen to the rates before the Pandemic and …
A tale of two interest rate decisions
The US Federal Reserve or Fed, and the UK Central Bank or the Monetary Policy Committee (MPC,) both made the decision on whether to cut interest rates on the same day, although, given the time difference, it happened at different points. The US Fed cut interest rates by ½% to a range of 4.75% to …
Interest rates can be cut now
One of the oddities about the narrative on the direction of interest rates is the argument that, because consumer price inflation is still above the 2% target, the Bank of England cannot cut interest rates. That suggests that interest rate policy changes immediately impact the current inflation rate in the short term. However, this view …