Interest rates are hitting the headlines again more than a decade after they plunged following the global financial crisis.
The US Federal Reserve – the country’s central bank – has come under severe criticism for shaving rates by just 0.25%.
The cut is the first in the USA for 10 years and was accompanied by some strong comments from President Donald Trump, who expected a bigger cut.
Fed chairman Jerome Powell signalled the central bank is ready to make more cuts to stimulate an economic recovery.
The benchmark rate now stands between 2% and 2.25%.
Trade war blamed for stalling growth
Powell blamed weak global growth and a trade war between the US and China for disrupting the world economy and impacting strong growth in America.
“We see those as threats to what is clearly a favourable outlook. And we see this action as designed to support them and keep that outlook favourable,” he said.
Trump tweeted that Powell had let America down by not going far enough with the rate cut.
“What the market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, the European Union and other countries around the world,” said the president.
“As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”
UK keeps rate on hold
Two of the Fed’s rate setters voted to keep rates as they were.
“The Fed will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion,” said minutes of the meeting.
Britain’s Bank of England monetary policy committee kept interest rates on hold at 0.75%, although a rise was possible, according to speculation.
Meanwhile, the Pound has been hit by Brexit uncertainty and is trading at around $1.1 – a 30-month low.
The bank warned interest rates are likely to rise, especially due to uncertainty over a ‘disorderly’ no deal Brexit.