The Bank of England is anticipated to make its first rate cut since the pandemic in its upcoming policy announcement on Thursday. This decision comes as UK inflation has eased to the Bank of England's 2% target, with services inflation notably high at 5.7%, partly attributed to robust wage growth. Despite this, most investors are expecting a quarter-point reduction on August 1.
Conversely, the Bank of Japan has opted to raise its benchmark interest rate by a quarter point, citing persistently low inflation levels. Japan has been striving to stimulate consumer demand to achieve its 2% inflation objective. During the pandemic, Japan maintained low rates to encourage spending and counter a slowing economy; however, consumers curtailed their expenditures instead.
Meanwhile, the European Central Bank recently declared its decision to maintain its benchmark rate unchanged earlier this month. The central banks' varying approaches reflect the unique economic challenges faced by each region, from managing inflation levels to stimulating consumer spending amidst uncertain economic conditions.
