In a recent announcement, the chairman of the US Federal Reserve hinted at a potential pre-election rate cut, signaling the beginning of the end of high borrowing costs globally. The Fed decided to keep interest rates steady but indicated a possible rate cut in September if inflation continues to decrease. This news caused US stock markets to rise, reflecting optimism in the economy’s progress towards its 2% inflation target.
Investors are anticipating a rate cut in September, just ahead of the US presidential election in November. Moreover, there is a 60% chance that the Bank of England will also reduce rates. While the UK’s inflation has fallen back to the 2% target, concerns remain about services inflation remaining high.
The recent US job market data suggests a cooling trend that would alleviate inflationary pressures. However, economists have varying opinions on the future rate cuts, with some suggesting a faster pace than anticipated. Overall, the global economic landscape is shifting towards lower borrowing costs, setting the stage for potential policy adjustments in the coming months.\
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