Markets rally following Fed cut

UK economists have welcomed the US interest rate cut and were pleasantly surprised by how much the Fe...

UK economists have welcomed the US interest rate cut and were pleasantly surprised by how much the Federal Reserve reduced the rate. However, commentators are divided in their views on what this could mean for UK interest rates. Last Tuesday it was announced that the Fed had decided to cut rates by 50 basis points from 5.25% to 4.75%. A cut of 25bp was widely expected by analysts around the world as concerns for the US economy were heightened by the credit crunch, inflation and sub-prime lending. The surprise 50bp cut sent equity markets rallying around the world after a prolonged peri...