Tag: Interest rate

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Bank of England Holds Rates at 3.75% as Inflation Fears Linger

UK bank interest rates stick for July 2026

The Bank of England has kept UK interest rates on hold at 3.75%, choosing caution over action as policymakers continue to wrestle with stubborn inflation despite signs that price pressures are gradually easing.

The decision, widely expected by financial markets, reflects the Monetary Policy Committee’s concern that inflation risks remain elevated.

Inflationary pressure persists

Although headline inflation has fallen sharply from its peak, persistent wage growth and resilient services inflation continue to cloud the outlook.

For homeowners and businesses, the announcement provides some welcome certainty after a prolonged period of rising borrowing costs.

However, the Bank stopped short of signalling that rate cuts are imminent, stressing that monetary policy must remain restrictive until it is confident inflation will return sustainably to its 2% target.

Economic data

Governor Andrew Bailey has repeatedly emphasised that the Bank will remain guided by incoming economic data rather than a predetermined path.

That leaves future policy finely balanced, with inflation, wage settlements and consumer spending likely to determine the timing of any reductions in borrowing costs.

Scrutiny

Investors will now scrutinise forthcoming economic releases for clues about the next move. While many economists still expect interest rates to edge lower before the end of the year, the latest decision underlines the Bank’s determination not to relax policy prematurely.

For now, inflation remains the overriding concern, and patience continues to be the watchword.

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Nasdaq’s Rally Snaps as Hot Jobs Data Slams Tech

Nasdaq drops

The Nasdaq Composite endured a bruising session on Friday, 5th June 2026, tumbling more than 4% in its steepest single‑day decline since April 2025.

The sell‑off was triggered by a powerful combination of surging Treasury yields and a violent unwinding in semiconductor and mega‑cap technology stocks, following a far stronger‑than‑expected U.S. jobs report.

Employers added 172,000 jobs in May 2026, more than double economists’ forecasts, a result that swiftly erased hopes of near‑term Federal Reserve rate cuts and instead fuelled expectations of tighter policy for longer.

Chipmakers bore the brunt of the rout. Broadcom, Nvidia, Micron, Marvell and AMD all suffered heavy losses, with the sector’s slump wiping out well over a trillion dollars in market value across the week.

The Nasdaq closed at 25,709.43, down around 4.18%, while the S&P 500 fell 2.6% and the Dow Jones Industrial Average dropped 695 points.

The broader risk‑off mood extended beyond equities. Bitcoin slid below $60,000 for the first time since 2024, while gold and silver also weakened as investors recalibrated expectations for monetary policy.

With Treasury yields climbing above 4.5%, markets ended the week facing renewed questions about valuations, positioning, and the durability of the two‑year AI‑driven rally.

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Japan’s Inflation Slips Below 2% for the First Time in Nearly Four Years

Low inflation in Japan

Japan’s inflation rate has dipped below the Bank of Japan’s long‑standing 2% target for the first time in almost four years, marking a notable turning point in the country’s post‑pandemic price cycle.

Official figures show headline inflation easing to 1.5% in January, ending a 45‑month stretch above the central bank’s benchmark.

Slowdown

The slowdown reflects a broad cooling in cost pressures that had dominated the Japanese economy since 2022. Food inflation has eased to a 15‑month low, while transport, healthcare, and household goods have all seen slower price growth.

Energy costs remain negative, helped by government subsidies that continue to cushion households from global fuel volatility.

Core inflation — which strips out volatile fresh food prices — has also softened, slipping to 2.0%, its weakest pace in two years.

Analysts attribute much of the deceleration to base effects following last year’s sharp price increases, suggesting that underlying demand‑driven inflation remains relatively stable.

For the Bank of Japan, the latest figures present a delicate policy challenge. While inflation is finally within the target range, underlying price pressures have not disappeared entirely.

Rate increases?

Some economists argue the BOJ may still lean toward gradual rate increases, particularly as wage negotiations progress and the government pushes for sustained real income growth.

Others caution that tightening too soon could risk undermining Japan’s still‑fragile consumption recovery.

What is clear is that Japan has entered a new phase of its inflation story — one defined less by imported cost shocks and more by the question of whether domestic demand can carry the momentum forward.

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Bank of England holds rates amid inflation concerns

BoE interest rate decision

On 18th September, the Bank of England voted 7–2 to keep interest rates steady at 4%, resisting calls for further easing amid persistent inflationary pressures.

The decision follows August’s 25 basis point cut and reflects caution over elevated wage growth and stagnant UK GDP.

Inflation held at 3.8% in August, nearly double the Bank’s 2% target. Policymakers signalled a ‘gradual and careful’ approach to future cuts, citing upside risks to medium-term inflation.

With economic growth flat and the jobs market cooling, analysts now expect the next rate cut to come in early 2026.

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Fed cuts rates amid labour market strains and political Powell pressure

U.S. cuts rates

On 17th September 2025, the U.S. Federal Reserve announced its first interest rate cut of 2025, lowering the benchmark federal funds rate by 0.25% to a range of 4.00%–4.25%.

The decision follows nine months of monetary policy stagnation and comes amid mounting evidence of a weakening labour market and persistent inflationary pressures.

Fed Chair Jerome Powell described the move as a ‘risk management cut’, citing slower job growth and a rise in unemployment as key drivers.

While inflation remains elevated—partly due to tariffs introduced by the Trump administration—the Fed opted to prioritise employment support, signalling the possibility of two further cuts before year-end.

The decision was not without controversy. New Fed Governor Stephen Miran, recently appointed by President Trump, reportedly dissented, advocating for a more aggressive half-point reduction. Political tensions have escalated, with Trump publicly urging Powell to ‘cut bigger’.

Markets responded with mixed signals: the Dow rose modestly, while the S&P 500 and Nasdaq slipped slightly. However, each improved in after-hours trading.

Analysts remain divided over the long-term impact, with some warning that easing too quickly could reignite inflation.

The Fed’s next move will be closely watched as it balances economic fragility with political crosswinds.

The next U.S. Federal Reserve meeting is scheduled for 29th–30th October 2025, with the interest rate decision expected on Wednesday, 30th October at 2:00 PM ET.

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U.S. interest rates held steady at 4.25% to 4.50%

U.S. Federal Reserve

On 30th July 2025, the Federal Reserve opted to keep its benchmark interest rate unchanged at 4.25%–4.50%, defying mounting pressure from President Trump to initiate cuts.

The decision, reached by a 9–2 vote, marked the first time since 1993 that two governors—Michelle Bowman and Christopher Waller—formally dissented, advocating for a quarter-point reduction.

Fed Chair Jerome Powell cited “moderated” economic growth and “somewhat elevated” inflation as reasons for maintaining the current stance.

Despite a robust Q2 GDP reading of 3%, Powell emphasised the need for caution, particularly amid uncertainty surrounding Trump’s tariff policies.

Markets reacted with disappointment, as hopes for a dovish pivot were dashed. Powell remained non-committal about September’s outlook, reportedly stating, ‘We have made no decisions about September’.

With inflation still above target and political tensions rising, the Fed’s wait-and-see approach underscores its commitment to data-driven policy.

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Switzerland enters era of zero interest rates

0% Switzerland Interest Rate

Switzerland has officially re-entered an era of zero interest rates, following a 0.25% cut by the Swiss National Bank (SNB) on 19th June 2025.

The move, though widely expected, marks a significant shift in monetary policy as the nation grapples not with inflation – but deflation.

Consumer prices in May dipped 0.1% year-on-year, driven largely by the enduring strength of the Swiss franc.

The SNB cited diminished inflationary pressure as the rationale behind the cut and indicated it remains focused on long-term price stability.

Chairman Martin Schlegel emphasised that short-term negative inflation readings weren’t the primary motivator. Instead, the Bank revised its inflation forecast down to 0.2% for 2025 and 0.5% for 2026.

Switzerland’s strong currency continues to weigh heavily on imported goods prices – an especially potent factor in a small, open economy.

Analysts suggest the SNB may go lower if inflation fails to rise, sparking speculation about a return to negative rates.

This development sets Switzerland apart from other major economies still battling inflation, underscoring the unique challenge of managing deflation in a world accustomed to rate hikes.

The next SNB policy decision is due in September 2025. Until then, all eyes remain on the franc – and the fallout.

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Bank of England holds UK interest rate at 4.25%

UK interest Rate

The Bank of England held its base interest rate steady at 4.25% on Thursday 19th June 2025, with a 6–3 vote from the Monetary Policy Committee (MPC).

Three members pushed for a 0.25% cut, but the majority opted for caution amid persistent inflation and global uncertainty.

Inflation ticked up slightly to 3.4% in May, driven by regulated prices and earlier energy cost increases.

While wage growth is easing and the labour market is loosening, the Bank signalled it’s not ready to ease policy further just yet

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ECB cuts interest rate to 2%

EU interest rate at 2%

The European Central Bank (ECB) announced a 0.25% rate cut on 5th June 2025, lowering the deposit facility rate to 2%.

This marks the seventh consecutive rate cut as the ECB continues its monetary easing cycle.

ECB President Christine Lagarde emphasised that inflation has fallen below the 2% target, but economic growth remains sluggish.

Investors are now watching for further rate cuts later in the year, with markets pricing in another 0.25% reduction in October.

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EU reduces interest rate to 2.25%

EU reduces interest rate

The European Central Bank (ECB) announced its seventh consecutive interest rate cut on Thursday 17th April 2025, lowering the rate by 0.25% to 2.25%.

This decision aims to counter economic growth concerns fueled by global trade tensions, particularly the impact of tariffs imposed by the United States.

The ECB’s move is expected to make borrowing more affordable, supporting consumer spending and business investment.

Inflation in the eurozone has fallen to 2.2%, close to the ECB’s target, shifting the focus to growth worries.

The eurozone economy grew by a modest 0.2% in the last quarter of 2024, highlighting the need for measures to stimulate activity.

The ECB’s decision reflects the challenges posed by trade uncertainties and the potential impact of tariffs on European industries.

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U.S. holds interest rate steady despite Trumps tariff threats – transitory inflation is back – remember that?

U.S. Interest rate

The Federal Reserve has opted to maintain its federal funds rate within the range of 4.25% to 4.5%, a decision that aligned with market expectations

This comes amidst increasing uncertainty surrounding the economic landscape. While the Fed’s current stance is to hold interest rates steady, it has reiterated its intention to implement two rate cuts later this year – a prospect that has garnered significant attention and appreciation from investors.

Fed Chair Jerome Powell reportedly expressed measured optimism about the state of the U.S. economy during his press conference.

He highlighted the strength of labour markets, and the progress made toward reducing inflation, which, although still above the 2% target, has shown improvement.

Powell also addressed potential short-term impacts of tariffs but downplayed their long-term influence on inflation.

Financial markets responded positively to the announcement, with major stock indices such as the Dow, S&P 500, and Nasdaq rallying after the recent slump.

This reflects investor confidence in the Fed’s ability to navigate economic challenges while supporting growth. However, economists warn of potential risks, including stagflation, as uncertainties tied to Trump’s tariffs and consumer spending persist.

The decision underscores the Fed’s balancing act between fostering economic stability and addressing inflationary pressures, leaving room for cautious optimism as the year unfolds.

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First interest rate cut for India since 2020

India interest rate

The Reserve Bank of India (RBI) has cut its benchmark interest rate by 25 basis points to 6.25%, marking the first rate cut since May 2020

This decision comes amid concerns over a slowdown in the world’s fifth-largest economy.

The central bank forecast real GDP growth for next fiscal year at 6.7%, and inflation rate at 4.2%.

The RBI’s Monetary Policy Committee (MPC) cited the need to support economic activity as the primary reason for the rate cut. The Indian economy has been experiencing sluggish growth, with GDP expanding at a slower pace than expected.

Data driven

The latest data shows that the economy grew by just 5.4% in the September quarter, the slowest rate in seven quarters. This slowdown has been attributed to tepid urban consumption and sluggish manufacturing.

Inflation, which had been a major concern for the RBI, has shown signs of easing. Retail inflation dropped to a four-month low of 5.22% in December 2024, providing the central bank with some room to focus on growth rather than solely on price stability.

RBI Governor Sanjay Malhotra, in his first monetary policy review, reportedly stated that inflation is expected to further moderate in 2025-26.

Benefits

The rate cut is expected to benefit borrowers, including homeowners and small businesses, by making borrowing cheaper. However, it may also lead to lower returns on fixed deposits, posing a challenge for savers, especially senior citizens who rely on interest income.

The government’s recent budget, which included sweeping income tax cuts, is also aimed at putting more money in the hands of consumers and boosting spending.

Together with the rate cut, these measures are expected to provide a much-needed stimulus to the economy.

While the rate cut is a positive step towards reviving growth, it also underscores the challenges facing the Indian economy.

The RBI will need to carefully monitor inflation and other economic indicators to ensure that the measures taken do not lead to unintended consequences such as higher inflation.

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Fed holds rates steady – calculates a less confident view on inflation

Federal Reserve

The Federal Reserve maintained its key interest rate on Wednesday 29th January 2025, reversing a recent trend of policy easing as it assesses the likely turbulent political and economic landscape ahead.

As expected, the Federal Open Market Committee (FOMC) left its borrowing rate unchanged in a range between 4.25% and 4.50%.

The decision followed three consecutive cuts since 2024 and marked the first Federal Reserve meeting since frequent Fed critic Donald Trump assumed the presidency last week. He almost immediately expressed his intention for the central bank to cut rates.

The post-meeting statement scattered a few clues about the reasoning behind the decision to hold rates steady. It offered a more optimistic view on the U.S. labour market while losing a key and telling reference from the December 2024 statement that inflation ‘has made progress toward’ the Fed’s 2% inflation goal.

Statement

Text appearing for the first time in the new statement is in red and underlined. Black text appears in both statements.

Text appearing for the first time in the new statement is in red and underlined. Black text appears in both statements.

The decision comes against a volatile political backdrop.

In just over a week, Trump has disrupted Washington’s policy and norms by signing hundreds of orders aimed at implementing an aggressive agenda.

The U.S. president has endorsed tariffs instruments of economic and foreign policy, authorised a wave of deportations for those crossing the border illegally, and a series of deregulatory initiatives.

Trump spoke of his confidence that he will bring down inflation and said he would ‘demand’ that interest rate be lowered ‘immediately.’

Although the president lacks authority over Fed beyond nominating board members, Trump’s statement indicated a potentially contentious relationship with policymakers, similar to his first term.

Inflation has moved down sharply from the 40-year peak it hit in mid-2022, but the Fed’s 2% goal has remained elusive.

In fact, the central bank’s preferred pricing gauge showed headline inflation ticked higher to 2.4% in November, the highest since July, while the core measure excluding food and energy held at 2.8%.

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Japan increases interest rate chasing down rising inflation

Bank of Japan

The Bank of Japan recently raised its interest rate by 25 basis points to 0.5%, marking the highest level since 2008

This decision was influenced by sustained inflation and rising wages, signalling a cycle in the economy.

The move was expected by many economists and resulted in the Japanese yen strengthening against the dollar.

The Bank of Japan has indicated that more interest rate hikes may be on the horizon.

One year Nikkei chart

One year Nikkei chart
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Fed cuts interest rate by 0.25% – indicates fewer cuts in 2025

U.S. interest rate

The Federal Open Market Committee (FOMC) cut its borrowing rate to a range of 4.25% – 4.50%, mirroring its December 2022 level.

The Fed indicated that it probably would only lower twice more in 2025, according to the closely watched ‘dot plot’ matrix of individual members’ future rate expectations

While the decision itself was closely watched, the primary concern centered on what they would communicate regarding its future direction, considering inflation remains above and economic growth is relatively – conditions that do not typically align with easing.

The Fed said that it would probably only lower the interest rate twice in 2025. The markets reacted with a sharp pullback with the Dow hitting a 10-day losing streak – last seen in 1974.

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U.S. annual inflation rate increases to 2.7% in November 2024 – as expected

Inflation U.S.

U.S. consumer prices rose at a faster annual pace in November 2024, a reminder that inflation remains an issue both for households and policymakers.

The consumer price index (CPI) showed a 12-month inflation rate of 2.7% after increasing 0.3% on the month, the Bureau of Labor Statistics reported Wednesday 11th November 2024. The annual rate was 0.1 percentage point higher than October 2024.

Excluding food and energy costs, the core CPI was at 3.3% on an annual basis and 0.3% monthly. The 12-month core number was unchanged from a month ago.

All of the numbers were in line with consensus estimates.

The data comes with Federal Reserve deciding over what to do at their policy meeting next week. Markets strongly expect the Fed to lower its benchmark short-term borrowing rate by 0.25% at the meeting on 18th December 2024.

It is unlikely now that a January rate cut will happen as the FOMC measures the impact recent cuts have had on the economy.

Odds are of a 99% certainty of a cut in December 2024.

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Euro zone economy grows 0.4% in third quarter – better than expected

Euro Zone GDP

The euro zone’s economy expanded by 0.4% in the third quarter, according to flash figures released by the European Union’s statistics office (Eurostat) on Wednesday 30th October 2024.

Economists had anticipated a growth of 0.2%, following a 0.3% increase in the second quarter.

Analysts predict that euro zone growth may pick up cautiously in the upcoming months, in light of lower interest rates and subsiding inflation.

At its October 2024 meeting, the European Central Bank (ECB) reduced rates for the third time this year, following a final reading of September’s EU headline inflation at 1.8%.

The ECB pointed to sustained indications of sluggish activity in the euro area as a significant reason for the rate cut in October.

Markets have completely factored in another 0.25% reduction by the ECB for its final meeting of the year in December 2024.

Germany, the largest economy in the euro zone, reported an unexpected 0.2% growth in the third quarter, as per figures released on Wednesday 30th October 2024. This growth helped the country steer clear of the recession predicted by some economists.

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Russia’s central bank raises key rate to 21% to tackle high inflation

Russia bank rate

On Friday 25th October 2024, Russia’s central bank increased its key interest rate by 2% (200 basis points) to 21%, attributing the decision to consumer price increases significantly exceeding its projections and cautioning about persistent high inflation risks in the medium term

This rate hike surpasses the 1% (100 basis-point) rise anticipated by analysts and sets the bank’s benchmark rate at its highest level since February 2003, as reported by analysts.

Previously, the key rate had been raised by 1% (100 basis points) to 19% in September 2024.

It was reported that the annual seasonally adjusted inflation hit an average of 9.8% in September 2024, up from 7.5% in August 2024.

It is now anticipated the rate will stick at around the 8.0% – 8.5% range for the remainder of 2024. This is running above a July 2024 forecast of around 6.5% – 7.0%.

See more central bank interest rate moves here

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China cuts lending rates by 0.25%

China cuts interest rates

China on Monday 21st October 2024 lowered its main benchmark lending rates by 0.25%

The People’s Bank of China (PBOC) has announced a reduction in the one-year loan prime rate (LPR) to 3.1% and the five-year LPR to 3.6%.

The one-year LPR affects corporate and most household loans in China, whereas the five-year LPR is a reference for mortgage rates.

This adjustment was anticipated. The governor of China’s central bank reportedly on Friday 18th October 2024 hinted at a forum in Beijing that the loan prime benchmark rates would decrease by 0.20% to 0.25%.

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ECB cuts rates for the third time this year by 0.25% to 3.25%

ECB interest rate cut

On Thursday 17th October 2024, the ECB announced its third interest rate reduction of 2024, as inflation risks within the European Union diminished more rapidly than anticipated.

At its October meeting, the central bank decreased the deposit rate by 0.25%. This decision followed a slowdown in the euro area’s price increases to 1.8% in September 2024, falling below the central bank’s target of 2%.

The EU interest rate is now: 3.25%

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UK inflation in surprise fall to 1.7%

UK Inflation down below target

UK inflation fell unexpectedly to 1.7% in the year to September 2024, the lowest rate in three-and-a-half years

This indicates that inflation, which is the rate at which prices increase over time, is currently below the Bank of England’s target of 2%, potentially leading to further reductions in interest rates next month.

The Office for National Statistics (ONS) reported that petrol and diesel prices saw a notable decrease, falling by 10.4% in September 2024compared to the same month the previous year.

Additionally, the cost of fares for domestic, European, and long-haul flights contributed to the lower inflation rate. While fares typically decrease after the summer peak, this year they have reduced more than usual.

UK interest rate at 1.7% below the Bank of England target of 2%

UK interest rate at 1.7% below the Bank of England target of 2%

With inflation dropping below economists’ expectations, the markets are anticipating a cut in interest rates at the Bank of England’s upcoming meeting in November 2024. The present rate stands at 5%, and a reduction of 0.25% is now deemed highly probable.

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U.S. cuts interest rate aggressively by 0.50% bringing the Fed rate range to 4.75% – 5.0%

U.S. interest rate

The Federal Open Market Committee (FOMC) has voted to reduce the interest rate by 0.50% after having maintained its benchmark rate within the range of 5.25% to 5.50% since July 2023

The previous rate was the highest seen for 23 years and remained unchanged even though the Fed’s favoured inflation gauge has decreased from 3.3% to 2.5%, and the unemployment rate has climbed from 3.5% to 4.2% during this period.

Following the interest rate cut today, 18th September 2024 of 0.50%, the new rate now stands at 4.75% to 5.0%.

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U.S. PPI wholesale prices rose 0.2% in August 2024

U.S. PPI data

In August 2024, wholesale prices saw an increase that was roughly in line with expectations, marking the final inflation data point before the Federal Reserve’s anticipated interest rate cut due on 18th September 2024

The Bureau of Labor Statistics announced on Thursday 12th September 2024 that the producer price index (PPI), which measures the prices received by producers for goods and services for final demand, increased by 0.2% for the month, matching the consensus estimate.

Excluding food and energy, the PPI experienced a 0.3% increase, slightly above the 0.2% consensus estimate. This core increase persisted even when trade services were removed from the calculation.