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9h ago

Bank of England Prepares to Cut Rates as Federal Reserve Holds Steady

The BoE is set to lower rates to 4.25% on May 8, while the Fed maintains its position at 4.25%-4.50%, reflecting divergent responses to easing inflation and trade uncertainty.

The Federal Reserve building is seen in Washington, U.S., January 26, 2022. REUTERS/Joshua Roberts/File Photo
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Jeremy Siegel in 2014.
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Overview

  • The Bank of England is widely expected to cut its base interest rate by 0.25 percentage points to 4.25% on May 8, marking its fourth reduction since August 2024.
  • UK inflation has eased, with CPI falling to 2.6% in March and services inflation declining to 4.7%, creating room for rate cuts to support economic growth.
  • The Federal Reserve is anticipated to keep its policy rate steady at 4.25%-4.50% during its May 7 meeting, citing the need for more data on the economic impact of US tariffs.
  • US tariffs, introduced by President Trump, have disrupted global trade, with economists noting both inflationary and disinflationary effects depending on trade diversion and price pressures.
  • Financial markets are pricing in further BoE rate cuts this year, while Fed forecasts remain divided, with some predicting no cuts and others expecting up to five by year-end.