If the Fed cuts, will the Bank of England follow?

The implication of any move by the Fed will be factored into the November base rate meeting where the Bank of England is expected to announce the second 25 bps cut. For those taking out debt or renewing facilities such as business loans and mortgages in the next 6 months, it would be prudent to keep an eye on rates and also the lender's wellness to amend rates before completion. There could be some heavy reductions ahead.

With markets pricing in a 60% probability of a hefty 50 basis point rate cut by the Fed and following the ECB’s rate cut last week, the BoE may need to accelerate its transition to a dovish stance. A cut of that magnitude by the Fed could mark the beginning of a more aggressive, coordinated global easing cycle. Following the latest GDP figures falling short of expectations and the UK’s factory output dropping for the first time in four years, the BoE may have ample reason to recalibrate its position, expediting the transition to a period of monetary easing. However, with inflationary pressures remaining ever-present and wage pressures persisting, the MPC may decide that discretion is the better part of valour, holding firm even as their American counterparts loosen the purse strings.