As expected, central banks in the UK, US and Europe opted to leave interest rates unchanged in late October and early November. Policymakers adopted a “wait-and-see” approach to allow them to assess the economy and the impact of previous increases.
- The US federal funds rate remained at 5.25%-5.5%
- UK base rate was held at 5.25%
- The eurozone’s key interest rate stayed at 4%
As expected, central banks in the UK, US and Europe opted to leave interest rates unchanged in late October and early November. Policymakers adopted a “wait-and-see” approach to allow them to assess the economy and the impact of previous increases.
“A few months of good data are only the beginning” (Fed Chair Jerome Powell)
The Bank of England (BoE) maintained its key base rate at 5.25% but emphasised that officials remain ready to tighten further if necessary. The BoE provided a lacklustre outlook for the UK next year, downgrading its forecast for economic growth and warning that inflation is not expected to reach its 2% target until the end of 2025.
In the US, the Federal Reserve (Fed) maintained its federal funds rate at a range of 5.25% to 5.5% in a decision intended to allow officials to “assess additional information” on the economy. Fed Chair Jerome Powell warned that “a few months of good data are only the beginning” of what it would take to build confidence that inflation is moving sustainably towards its target and emphasised that there is still a long way to go.
Elsewhere, the European Central Bank (ECB) held its key interest rate at 4% following a series of rate increases designed to address persistent inflationary pressures across the eurozone. Policymakers expect the region’s economy to remain weak for the rest of this year, according to ECB President Christine Lagarde ; nevertheless, looking further ahead, growth is forecast to pick up once inflation starts to moderate.
