What's happened
The US Federal Reserve and Bank of England have paused interest rate cuts due to persistent inflation and economic slowdown. The Fed cited cautious signals, while the BoE expects to hold rates until inflation eases further. Market reactions reflect uncertainty about future monetary policy moves.
What's behind the headline?
The recent pause in interest rate adjustments by both central banks underscores a shared concern: inflation remains sticky despite previous easing efforts. The Fed's cautious stance, as articulated by Jerome Powell, signals a recognition that aggressive rate cuts could leave inflation unfinished, risking a rebound. Meanwhile, the BoE's decision reflects a similar prudence, with inflation at 3.8% and rising food prices, despite a slowing labor market. The divergence in tone—Powell's cautious approach versus some Fed officials advocating for quicker cuts—highlights internal divisions about the inflation outlook and economic resilience. Market reactions, including surging stocks and gold prices, suggest investors anticipate future rate cuts, but the bond market's response indicates skepticism about the effectiveness of these moves in lowering long-term yields. The overarching trend is clear: central banks will likely proceed with gradual, calibrated adjustments, balancing inflation risks against economic slowdown, rather than rushing into aggressive cuts that could destabilize markets or reignite inflation. This cautious approach will shape monetary policy through the end of 2025, with significant implications for borrowing costs, investment, and consumer spending.
What the papers say
The articles from AP News, The Independent, Bloomberg, and The Guardian collectively depict a central banking landscape characterized by cautiousness and internal debate. AP News reports Powell's emphasis on avoiding 'aggressive' rate cuts to prevent leaving inflation unfinished, contrasting with some Fed officials like Stephen Miran and Michelle Bowman, who advocate for quicker reductions. The Independent highlights the Bank of England's decision to hold rates at 4%, citing persistent inflation driven by food prices and wage pressures, with expectations of no immediate cuts. Bloomberg emphasizes market expectations of multiple rate reductions, but also notes skepticism from the bond market about the impact of these cuts on long-term yields. The Guardian underscores the UK’s inflation concerns and the MPC's cautious stance, reflecting a global trend of central banks prioritizing inflation control over rapid easing. Overall, the sources reveal a consensus on the need for gradualism, but also internal disagreements about the timing and magnitude of future rate moves, driven by conflicting signals from inflation data and employment trends.
How we got here
Both the Federal Reserve and Bank of England have been navigating a complex economic landscape marked by stubborn inflation and slowing growth. The Fed has been gradually reducing rates since last year, but recent data showing elevated inflation and a slowdown in hiring have prompted caution. Similarly, the BoE has maintained its rate at 4% amid rising food and core inflation, with expectations of holding until inflation shows clearer signs of easing. These decisions follow a series of rate cuts aimed at supporting growth, but inflation remains above target, complicating policy choices.
Go deeper
Common question
-
What Does Rising Inflation Mean for the Economy and Consumers?
With recent inflation data showing consumer prices rising above the Fed's 2% target, many are wondering what this means for the economy and everyday spending. How will the Federal Reserve respond? What are the risks of persistent inflation? Here’s what you need to know about inflation, interest rate decisions, and market trends right now.
-
Will the Bank of England Keep Rates at 4%? What’s Next for US and UK Interest Rates?
With inflation concerns still on the rise and central banks carefully balancing economic growth, many are wondering what the future holds for interest rates in the UK and US. Will the Bank of England hold steady at 4%, or will rates change soon? And what about the US Federal Reserve—are rate cuts on the horizon? Here’s what you need to know about the latest interest rate outlook and how it might affect you.
-
Why Are Central Banks Considering Rate Cuts Now?
Central banks like the US Federal Reserve and the Bank of England are signaling potential interest rate cuts amid ongoing inflation concerns and signs of economic slowdown. But why are they considering easing monetary policy now, and what does it mean for your savings, loans, and the economy? Below, we explore the key questions about these rate decisions, inflation impacts, and what to expect in the coming months.
-
Why Did Trump Criticize Putin Over Ukraine?
In September 2025, US President Donald Trump publicly criticized Vladimir Putin during a UK visit, highlighting tensions and disagreements over the Ukraine conflict. This raises questions about the current state of the war, international support for Ukraine, and Russia's plans for peace. Below, we explore the key issues shaping this ongoing geopolitical crisis and what it means for global stability.
-
Why Are Interest Rates Staying Steady in the US and UK?
With inflation remaining persistent, many are wondering why central banks like the US Federal Reserve and the Bank of England are holding interest rates steady. This page explores the reasons behind these decisions, what they mean for consumers and the economy, and whether rate pauses are good or bad. Keep reading to understand the complex balancing act central banks are performing in today’s economic climate.
-
What Are World Leaders Saying About the Ukraine War?
The Ukraine conflict continues to dominate headlines worldwide, with leaders from different countries voicing their opinions and strategies. From criticism of Russia's actions to support for Ukraine, the international response is complex and evolving. Curious about how global powers are reacting and what this means for peace efforts? Below, we explore key questions about the current state of the Ukraine war and international diplomacy.
-
How Do Global Political and Economic Events Impact Markets and Daily Life?
In today's interconnected world, political scandals, interest rate decisions, and safety recalls can have far-reaching effects on economies and everyday life. Curious about how these events influence markets, consumer safety, and political stability? Below, we explore key questions to help you understand the broader impact of recent headlines and ongoing global developments.
-
Why Are Central Banks Holding Rates? What It Means for You
Central banks like the Federal Reserve and Bank of England are pausing interest rate cuts despite economic pressures. This decision impacts everything from your savings to loans and the overall market. Curious why they’re holding rates and what it means for the economy? Keep reading to find out how these decisions could affect your finances and the global economy.
More on these topics
-
The Federal Reserve System is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics led to the desire for central control of the m
-
Jerome Hayden "Jay" Powell is the 16th Chair of the Federal Reserve, serving in that office since February 2018. He was nominated to the Fed Chair position by President Donald Trump, and confirmed by the United States Senate.
-
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
-
Andrew Bailey may refer to:
Andrew Bailey (banker) (born 1959), British banker, Governor of the Bank of England
Andrew Bailey (baseball) (born 1984), American baseball pitcher and coach
Andrew Bailey (performance artist) (born 1947), British performance.
-
Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
-
A consumer price index measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households.
-
In economics, inflation is a general rise in the price level of an economy over a period of time.
When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power
-
Rachel Jane Reeves is a British Labour Party politician serving as Shadow Chancellor of the Duchy of Lancaster and Shadow Minister for the Cabinet Office since 2020. She has been the Member of Parliament for Leeds West since 2010.