Have interest rate cuts gone too far?

Professional Adviser
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Fund manager's comment/Mark Parry

On 2 August, the Bank of England's Monetary Policy Committee surprised many people by cutting base rates to 5%. Was this, as some were quick to point out, a cut too far, or a correct realisation that rates were simply too high? The subsequent positive reaction of the gilt market would seem to suggest the latter, but those of us with even short-term memories can hardly forget the warnings of the dangers of fanning the flames of the 'two-speed' economy by cutting rates. Perhaps more telling is the sharp change in future rate expectations. Money markets have moved from pricing in a seri...

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