What's happened
Goldman Sachs predicts the Bank of England will cut interest rates to 2.75% by November 2025, while the Federal Reserve's recent cuts have not yet lowered mortgage rates. Analysts warn that current economic conditions may limit the effectiveness of these cuts.
Why it matters
What the papers say
According to Larry Elliott in The Guardian, Goldman Sachs predicts that the Bank of England will cut rates to 2.75% by November 2025, citing a restrictive current rate and falling inflation. In contrast, Bloomberg highlights that despite the Federal Reserve's recent cuts, mortgage rates have risen, complicating the expected economic stimulus. Lisa Shalett from Business Insider UK emphasizes that the current economic landscape is different from past cycles, with many companies holding cash and a significant portion of the housing market owned outright, which limits the impact of lower rates.
How we got here
The Bank of England has maintained high interest rates to combat inflation, but recent economic indicators suggest a shift. The Federal Reserve has also begun cutting rates, impacting borrowing costs across the board.
Common question
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Why is France's credit rating downgraded and what does it mean for Europe?
France's recent credit rating downgrade has raised eyebrows across Europe, especially as it grapples with austerity measures and political instability. This situation contrasts sharply with Italy's relative stability, prompting questions about the broader implications for the European Union. Here, we explore the reasons behind France's downgrade, its impact on the economy, and how the EU is responding to these challenges.
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