Will the UK and US cut interest rates like Europe?

The Federal Reserve's cautious approach to lowering interest rates in the US is influenced by several concerns. The central bank wants to ensure that inflation is sustainably moving down to its 2% target before making any changes to its monetary policy. This cautious stance is due to the global battle against inflation sparked by the pandemic, and the fact that price inflation is finally coming under control in some of the biggest and most severely affected economies.

The Fed is also concerned about the risk of moving too quickly to ease the stance of policy, emphasizing the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%. The central bank does not want to cut rates too quickly and run the risk of rekindling inflation, but also does not want to wait too long and take a chance on slowing the economy more than necessary.

Additionally, the Fed is aware that if it moves too fast in cutting rates, it could unleash a wave of economic activity that sends prices bubbling up again. On the other hand, moving too slowly could bring on a more severe economic downturn due to the weight of higher borrowing costs.

Overall, the Federal Reserve is proceeding cautiously and only raising interest rates if progress in the economy and inflation indicators justify such a move.

The recent ECB rate cut is similar to the actions taken by central banks in Canada, Sweden, Switzerland, Brazil, and Mexico, as all of these banks have reduced their interest rates in response to slowing inflation. The ECB cut its main lending rate from a record high of 4% to 3.75%, following Canada's national bank, which was the first Group of Seven body to lower rates as inflation subsides. These moves come as global central banks shift their focus from fighting inflation to stimulating economic growth. However, the ECB's rate cut is the first one in five years, while other central banks have made similar moves in recent months.