As political storm clouds gathered on both sides of the Atlantic, the US and the UK central banks made different choices on keeping a steady keel on the economy.
The US Federal Reserve has delivered a long-awaited interest rate hike, lifting its benchmark lending rate by quarter a percentage point to a range of 1-1.25pc. But 0.25pc is where the Bank of England left its interest rate this week, a record low where it has sat since August last year. Prior to that, the BoE had kept its interest rate at 0.5pc for more than seven years since the post-crisis cut in March 2009.
But, for once, the vote of the UK policymakers was not unanimous as three out of eight members of the Monetary Policy Committee disagreed and urged an interest rate rise back to 0.5pc. With the pound battered in the year since the Brexit referendum, which has driven up import costs, UK inflation is running ahead of the central bank’s 2pc target, having reached 2.9pc in May and looking on course to rise to 3pc in the autumn. So the mood at the MPC could shift towards an interest rate rise.
The immediate impact of the Fed interest rate hike was to push up the US dollar, which then caused a drop in the price of dollar-denominated exchange traded commodities. Three-months copper on the LME lost almost $100/t during the week, its biggest drop …
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Source: Metal Pages
WEEK IN REVIEW: Fed rate hike hits commodity metals
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