Interest rates could rise again across the world – here's why — SkimNews
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- European Central Bank raised interest rates to 2.5% this week, citing the Middle East conflict and warning inflation would "remain well above" its 2% target for some time.
- US Federal Reserve has held rates steady between 3.5% and 3.75% for five consecutive meetings, but Wall Street is now betting on a rate hike, with Deutsche Bank calling it "the most likely policy outcome."
- Brent crude has climbed to around $105 (£78) per barrel, approaching levels last seen at the outbreak of the conflict, as shipments through the Strait of Hormuz have been restricted.
- Newly-appointed Fed Chair Kevin Warsh has stayed tight-lipped on rate direction, but his repeated emphasis on slowing price rises has fueled market expectations of an increase.
- Donald Trump is publicly pressing for lower rates, posting on social media that the "Fed Board, with its great new leader, must get smart - BE PATRIOTS for a change."
- Bank of England is broadly expected to hold rates at 3.75% when it decides next week, as UK inflation at 2.9% shows "no sign" of second-round wage or price effects feeding through the economy.
- UK households are set to see energy bills rise to the highest level in three years heading into winter, with gas prices above 200p per therm for the first time since the end of 2022.
Why it matters: With the ECB already hiking to 2.5%, the Fed widely expected to follow, and gas prices above 200p per therm pushing UK household energy bills to a three-year high, borrowing costs are climbing globally even as Trump publicly demands the opposite from his own handpicked Fed chair — a direct clash that puts Warsh's independence under immediate scrutiny.
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