After the US Federal Reserve went big with a 0.5 point rate cut, hot on the heels of a European Central Bank cut, some suggested the Bank of England would respond on Thursday with a cut of its own.
Those buying into this theory clearly hadn’t been paying attention, as the rate-setting Monetary Policy Committee (MPC) made clear by holding rates at 5 per cent.
Governor Andrew Bailey said the MPC will not be governed by the Fed or anyone else (and nor should it be). The MPC has also repeatedly talked about the need for a cautious approach when it comes to reducing rates – which rose sharply in response to last year’s inflationary spike – to ensure there is no repeat of that painful episode. Keeping inflation down is “vital”, it said.
Big splashy moves such as the Fed’s 0.5 cut, which was applauded on Wall Street and lit a fire under the world’s markets, are just not the MPC’s thing. After getting a firm ticking-off from Ben Bernanke, a former chair of the Federal Reserve brought in to review the Bank’s economic modelling and forecasting in the wake of its failure to predict the postpandemic inflationary surge, the MPC published three scenarios.
この記事は The Independent の September 20, 2024 版に掲載されています。
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