The scholarship reacts almost immediately to the divergent announcements of large central banks. While the Fed remains cautious about its rates, the Bank of England begins a softening. These decisions strongly influence European stock market indices.
In short
- The Fed maintains its rates, reassuring markets which anticipate a relaxation by September.
- The Bank of England lowers its rates, stimulating the scholarship despite a fragile British economic context.
Here's how the scholarship reacts to Fed's decision
During its last meeting, the Fed decided to maintain its key rates. These therefore remain in The range of 4.25 % to 4.50 %.
This decision was expected. Nevertheless, analysts pay particular attention to the words of Jerome Powell. The president of the Fed recognizes two fundamental facts:
- Increased risks now weigh on employment and inflation.
- Growth slows down.
Despite the lack of announcement of an imminent drop in rates, stock markets reacted positively. Investors still anticipate monetary easing by September.
- CAC 40 jumped 0.8 %.
- The German Dax increased by 1.1 %.
- The British FTSE 100 posted an increase of 0.3 %.
This performance is explained by the conviction that the Fed remains attentive to economic signals, without risking an excessive tightening of its policy.
BOE lowers its rates in the face of economic challenges
For its part, the Bank of England surprises more than one by lowering its Caster rate of 25 basic points. It is therefore currently 4.25 %.
For stock market investors, this decision marks a turning point after several months of stability. It acts in fact in a context of slowing down the British economy. The latter notably undergoes the consequences of trade tensions with the United States, following the recent taxation of customs tariffs.
BOE anticipates economic growth of only 0.75 % in 2025. Its monetary policy committee now provides Gradual reductions in the key rate. It could therefore reach 2.75 % by early 2026. Inflation is expected at 2.6 %, close to the target.
The British financial markets welcome this announcement, with a slight rebound from the FTSE 100. This is indeed testifying to a revival of confidence of investors on the stock market.
The divergent decisions of the Fed and the Bank of England reflect the economic challenges specific to each region. The financial markets remain attentive to the policies of central banks, which undeniably influence the scholarship.
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