In not following the Fed, the BOE is set to be one of the herd
Subscribe to enjoy similar stories. The BOE looks set to do something it hasn’t often done in the past: diverging from the Federal Reserve. The Bank of England is set to join a growing number of central banks that are pressing ahead with cuts to their key interest rates, even as the most important central bank goes on a pause of uncertain duration.
Investors expect the U.K.’s central bank to lower borrowing costs for a third time Thursday, and signal that it is likely to cut again. If so, the BOE would be doing something it hasn’t often done in the past: diverging from the Federal Reserve. And it isn’t alone.
Last week, the Bank of Canada and the European Central Bank announced rate cuts hours before and the day after the Fed’s decision to leave borrowing costs on hold, respectively. They were joined by the central banks of Sweden and South Africa. Over previous weeks, the central banks of Peru, Turkey, Indonesia and Israel also cut their key rates as it became increasingly likely that the Fed would decline to do so at last week’s meeting, and possibly for a number of months.
South Africa’s central bank was explicit about the context in which it decided to lower borrowing costs, opening its policy statement with a summary of where it sees the Fed going. “The space for rate cuts by the Federal Reserve now looks limited, with core inflation still elevated and new inflation risks emerging, such as rising tariffs on trade," Lesetja Kganyago, governor of the South African Reserve Bank, said. “It is even possible that U.S.
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