This week we had two eagerly anticipated but equally unsurprising interest rate decisions. Both the US Federal Reserve and the Bank of England elected to keep interest rates where they are. In the UK inflation is coming down slower than hoped for and in the US economic growth is stronger than expected. Both banks are waiting for the impact of previous rate hikes to take effect and are happy to sit on their hands for now.
Despite nothing changing the market has reacted aggressively anyway. The number of “higher for longer” and “the new new-normal” blog posts, opinion pieces and research notes we’ve received in the last couple of days is astounding. Everyone it seems is starting to believe this time really is different and high rates are here to stay. With the typical delay between rates going up and the economy feeling the impact being between around 18 months, and this being month 16 since rates started rising, we feel this might be a little premature. Like the banks, we’re happy to wait and see.
For the following stories, please click on this link*
- Nick Booker: Our new Chartered Financial Planner
- Europe: Tight conditions slow EU economy
- US: Rates unchanged as American consumers continue to spend
- Equities: High costs challenge renewable industries
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