Thursday at the Bank of England was much like any other day. And then…nothing happened (one for Python fans). Interest rates stayed at 5.25%, just as, in Europe, they stayed at 4%. What does it all mean? Is this the beginning of the end for nothing happening to investments? Well, yes, it does signal that there may be a sense that inflation may be likely to continue to fall. Governments both here and there and across the Atlantic are desperate for it to do so before elections next year. Then interest rates can come down and off we can go again. Those are the issues which are holding back stock markets and the faintest firm glimmer of hope will send them up again. Perhaps quite sharply. Watch that space.
“CBI forecasts no Bank of England rate cuts until at least 2026”
The ‘lag’, ‘trailing leg’ or ‘long wake’ of any economic measure means that its effects are often felt long after the problem it was supposed to solve has disappeared. 2010’s ‘balancing the books within the space of one parliament’ (that went well, didn’t it?), austerity to you and me, is one example.