Bank of England, Fed and ECB poised to leave interest rates on hold -- Richard Partington, Guardian

Stubbornly high inflation forces central banks to avoid cuts, but markets expect falls next year

Richard Partington -- The Guardian

Dec. 10, 2023

The Western world’s largest central banks are poised to keep interest rates on hold this week amid concerns over stubbornly high inflation, despite growing expectations for sharp cuts in borrowing costs next year.

In a crunch week for the global economy, the U.S. Federal Reserve, Bank of England (BoE) and European Central Bank are expected to keep interest rates at their current restrictively high levels to ensure inflation continues to fall back from the highest levels in decades.

However, financial markets are expecting interest rates to be cut next year amid cooling inflation and as high borrowing costs weigh on economic growth, raising the prospect of recessions on both sides of the Atlantic before key elections.

“Their core message is likely to be similar. Good progress has been made towards reducing inflation, but they cannot afford to be complacent,” said Raphaël Olszyna-Marzys, an international economist at J Safra Sarasin Sustainable Asset Management.

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READ MORE: The Guardian