The Federal Open Market Committee held borrowing costs at a 23-year high of 5.5% for the eighth meeting in a row – while opening the door to the long-awaited “pivot” as soon as their next meeting in September.
In recent days, Federal Reserve Governor Christopher Waller – one of the central banks most influential voices and John Williams, president of the New York Fed – both said that rate cuts from the central bank will soon be appropriate following improved inflation data and fresh signs that the labour market is cooling off.
Their comments come despite opposition from Donald Trump – the Republican candidate for the presidency – who warned a pre-election shift in borrowing costs would strengthen the opposition parties chances ahead of the high-stakes November Presidential race.
The Fed’s September meeting, at which it is expected to lower its benchmark interest rate by a quarter point from its current 5.5%, will be the last one before November’s election.
The Bank of England has held interest rates at a 16-year high since August last year. Today’s rate cut puts the Bank of England ahead of the Federal Reserve, which is expected to lower rates in September, but behind the European Central Bank which made its first cut in June.
Historically, the Bank of England and the European Central Bank have both never cut interest rates before the U.S Federal Reserve.
