How far, how fast?

The US Federal Reserve cut interest rates by 0.5%, wrong-footing many forecasters who thought it would be less. More are on the way, but in smaller doses, in all likelihood. Meanwhile, the Bank of England remained cautious and maintained Bank Rate at 5%. The UK has a bit more work to do on the inflation front, justifying a more steady pace of cuts. UK retail sales rose strongly in August, but it’s a potentially short-lived bounce as consumers have since expressed some jitters as the October Budget looms into view. A timely reminder of the backdrop to the first fiscal event of the new Government came in the shape of public debt hitting the unwelcome level of 100% of GDP in August – a level unseen since the early 1960s!