Global rates moves signal tightening cycle near end

Jennifer Rudd/ September 4, 2008/ 12:15pm

As of this past Thursday, central bank interest rates reinforced investor opinion that the international rates cycle had peaked, with growth risks starting to outweigh the inflation worries of policymakers. The new ECB staff economic projections showed an increase in inflation forecasts and a cut in growth expectations compared to their diagnosis in the past three months. The ECB just raised rates two months ago so according to the Bank of America there should be no reason for them to have cuts now.

The speed and scale of Britain’s economic slowdown means interest rates could come down quite rapidly once inflation roughly doubles the central banks 2% target has peaked. Though, there is speculation of money markets having a good chance in pricing with percentages by this time next year. Since the United Kingdom has entered a recession it is unlikely to exit it until next summer; hopefully the price pressures will moderate and will open doors for aggressive interest rate cuts.

The growth versus inflation dilemma is playing out around the world. In the article it states later on that Canada’s central bank held a steady interest rate but it was warned that the United States economic outlook could worsen.

Just as last week, all of this is scary news; especially the statement made about inflation is still occurring around the world. Interest rates, economic slowdowns, and banks all across the country of the United Kingdom is being affected by other countries and then trickled down through other countries. For examples, all of the different trades that go on throughout the globe.
http://www.forbes.com/reuters/feeds/reuters/2008/09/04/2008-09-04T141016Z_01_SP15681_RTRIDST_0_GLOBAL-ECONOMY-RATES-WRAPUP-6.html