A shift in interest rate expectations

interest rates

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Increases in interest rates are likely to be more gradual and less dramatic than has been expected. Market forces are pointing to continuing pressure on the dollar and weaker sterling

Interest rate expectations have shifted dramatically in recent months. Although central banks have indicated they will hold rates at their current levels for longer and increase them gradually only when their economies are much closer to full capacity, markets are pricing in more immediate and extensive action. Rising confidence and supportive fiscal and monetary policy are providing the US with the prospect of sustainable economic growth after a couple of years of weak markets. The string of positive data has, however, been tempered by discouraging news about the labour market. Even wit...

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