At last, the bank base rate in the UK has been reduced for the first time in four years. It’s been a long time coming!
The UK investment markets rose strongly earlier in the week in anticipation of the interest rate reduction, but global markets regressed on Thursday after Japan’s currency rose on the back of an unexpected interest rate rise, coupled with weak US economic data and weaker than expected earnings for technology companies.
After all the turmoil of the last few weeks surrounding the US political scene, I was thinking that I would dedicate the whole of this week’s update on the US election and what the changing landscape means for the US economy and investment markets. However, after the volatility experienced yesterday, I will instead condense my thoughts into a shorter, higher-level view. Something you may be pleased about!
The month of July has demonstrated that anything can happen in the US and that we shouldn’t rule out all manner of surprises! Kamala Harris is now reported to be ahead in many polls!
On this week’s agenda:
- UK interest rate reduction
- Global markets wobble
- The changing dynamics in the race for the White House
- Market performance
- Summary
UK interest rate reduction
It’s been a long time coming, but finally, we have seen an interest rate reduction here in the UK, having held rates for the longest period since the Second World War (source: Investment Week). It was a close decision though, with the Monetary Policy Committee (MPC) voting 5-4 in favour of a reduction. This is the first time the rate has been cut since the onset of the pandemic.
The European Central Bank and now the UK, have reduced rates – with the US authorities being more reluctant because of mixed data signals.
Continues…
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