This comes just hours after the US central bank said it would take action the following month.
The Federal Reserve reduced its assessment of inflation to only “somewhat elevated” and celebrated “further progress” in the right direction on Wednesday evening while maintaining its benchmark rate in the 5.25%–5.50% range.
The message was exactly as predicted and was interpreted as providing permission for a cut to be made at the next meeting, which takes place on September 18.
Reporters were informed by Fed Chair Jay Powell that it was feasible as long as the statistics kept trending upward.
The Federal Reserve’s announcement made it possible for the Bank of England to take center stage the next day.
Most economists surveyed in advance by the news agency Reuters saw this interest rate decision as more likely than not, but still well balanced.
Based on market forecasts as published by LSEG, there was a 65% anticipation of a drop from 5.25% to 5%.
However, a lot of observers pointed out that the Bank had not provided any advice, thus a rate cut was far from certain.
The recent UK election has been partially attributed to this, as the Bank’s monetary policy committee members are keen to maintain the committee’s independence.
