Fed Interest Rates

TangentMan

The BofE need not necessarily follow the Federal Reserve. The market does not work like that.

The dollar is very weak at the moment - depending on what China does with its dollar reserves the US currency could come under some extreme pressure.

The Federal reserve is moving to try and stave some of this off.

In fact if Iran carries out one of this threats of a couple of years ago (to price oil in Euros) it could be extremely difficult for the dollar.

the BofE needs to look at inflation and the strength of the pound (which are linked through imports). Whilst a weak pound is good for exports (British stuff is cheap) it causes problems for imports and is potentially inflationary.

As long as inflation is controlled the BofE won't move. But if money moves out of the pound into the dollar (which is not a safe move just because the federal reserve has raised rates IMHO) then the BofE may move.

I think the BofE will wait until the next round of Fed movement. If the fed goes up again then it might move.

free4440273

i disagree. bofe will increase rates by at least .25 percentage points. they will manually 'kill' the housing market bubble - and it still is a bubble! federal reserve has not finished yet: bernanke's credibility has already been massively dented, but in this particular cat and mouse game the market, and not bernanke, will be squeaking. dole out the pain please, we can take it