A recent survey reveals that the United States is likely to keep interest rates high longer than anticipated, amidst persistent inflation challenges. Meanwhile, the UK shows signs of economic recovery despite prevailing financial pressures.
The United States is poised to keep interest rates elevated longer than originally projected, a recent survey conducted by the Financial Times indicates. Economists participating in the survey anticipate that the Federal Reserve will enact two or fewer rate cuts throughout the year, with the initial cut potentially postponed until as late as November, conflicting with earlier market expectations of more immediate reductions. This outlook aligns with concerns regarding persistent inflation, which complicates the Fed’s capacity to lower rates effectively. Such inflationary pressures, underscored by recent upticks in consumer and producer prices alongside robust job market and economic growth figures, suggest improved economic conditions in the U.S. compared to Europe but may hinder the Biden administration’s objectives of decreasing mortgage rates ahead of the November elections to address voter affordability issues.
Across the Atlantic, the British economy demonstrates signs of revitalization following a brief recession, with emerging data pointing towards consumer and business optimism, rejuvenation in the property sector, and gradual economic growth. Despite the challenges posed by rising living costs and subdued living standards which have affected the government’s popularity, the UK exhibits indications of recovery. The Office for Budget Responsibility projects a modest elevation in GDP per capita by 2028, while the Bank of England adopts a watchful approach, abstaining from any immediate interest rate adjustments until clear evidence of stable pay growth emerges. Bolstered by historical resilience, the UK’s economic landscape, though fragile, shows potential for steady progress towards recovery and stability.
