In line with consensus expectations, today the Bank of England cut interest rates pfor the second time in 2024, bringing them to 4.75%. With inflation falling below 2% – the central bank’s target level – the objective of this measure was to support economic activity, easing pressure on holders of loans and mortgages in the whole of the UK.
BoE cuts again
In fact, by lowering financing costs, the BoE hopes to encourage spending and investment, which could help counteract the current economic slowdown. He underlines it Richard Flax, Chief Investment Officer of Moneyfarm explaining that although many consider this second cut a positive move, some members of the Monetary Policy Committee (MPC) have underlined the importance of maintaining high attention on potential inflationary pressures, in the face of the increase of concerns following last week’s presentation of the autumn budget, in which Chancellor of the Exchequer Rachel Reeves proposed significant increases in public spending and addressed the potentialthe impacts of a Trump presidency.
but the future is uncertain
If today’s cut “was widely expected, the pace of the next ones is less certain. However, given the continued weakness of the domestic economy, it is possible that we will see further rate reduction in the coming months.”
Spotlight on FED move
Meanwhile, the spotlight is on the FED. The positive data arriving from the American economy and the cooling of inflation have consolidated operators’ expectations on a new cut this evening of the rates by the Federal Reserve at the end of the two-day meeting of Federal Open Market Committeeand (FOMC). This would be the second cut in a year after the half point cut decided on September
