Fed rate cut reaction: 'Premature' but Bank of England set to follow lead

Coronavirus concerns

David Brenchley
clock • 3 min read

A "bold" but potentially "premature" 50 basis point interest rate cut from the US Federal Reserve should pave the way for other central banks, including the Bank of England (BoE), who investment professionals believe is set to follow suit.

The Fed funds target range was cut to between 1% and 1.25% on Tuesday (3 March) on coronavirus fears,  following the stockmarkets' largest weekly fall since the Global Financial Crisis. As markets fell and economic growth expectations were downgraded, the market had begun to price in a rate cut, but an emergency move in between meetings are "rare", with the last coming in 2008. Market Movers Blog: 10-year US Treasury yield drops below 1% for first time Some believe the move is likely to be premature, while others believe it raises concerns over the Fed's independence, as well as it...

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