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 …
Economic data show a turning point has been reached in the cycle
With inflation falling sharply in the US, the eurozone, and the UK, there is no longer a debate about whether the peak in interest rates has been reached. Instead, there is a consensus about rate cuts being the next move, not rate rises and about when that will happen, not if. Financial markets are now …
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Watch out for the deflationary impact of a tight monetary stance
Some of the policies announced by the Bank of England at its last meeting (21 September 2023) are flying under the financial markets radar. Although attention was rightly focused on the Bank of England’s decision to leave interest rates on hold at 5.25% – the first hold in 14 meetings –another announcement at the meeting …
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