A shorter version this week as we have also sent the pension and inheritance tax overview out this morning. As usual, a lot is going on but in the main, the outlook is more positive.
The Federal Reserve (Fed) has kept the US interest rate on hold, unlike the Bank of England (BoE) which lowered the rate by 0.25%. Good news also, as the UK is the first country to sign a new trade deal with the Trump administration. We mustn’t also overlook a significant trade deal the UK has struck with India.
Doing a deal with China won’t be so easy! It’s interesting to read reports that China’s exports grew sharply in April as China increased exports to Southeast Asia and Europe. This news will undoubtedly help China’s position in its negotiations with the US.
So, on our agenda today:
- The Fed keeps rates on hold
- UK interest rate falls
- UK-US trade deal is agreed
- Buddying up with India
- Performance figures for major equity indices, year to date
- Summary
The Fed keeps rates on hold
Despite the clamour to lower rates, the Fed has erred on the side of caution because the US economy is beginning to see some negative signs due to the impact of Trump’s trade tariffs. The big risks for the US economy is stagflation, something I’ve highlighted before. This is when there is higher unemployment, a slowing economy and higher inflation.
However, Jerome Powell (the Fed Chair) was keen to point out that the US labour market was holding up well as employers actually added 177,000 jobs in April. In fact, the Fed stated “economic activity has continued to expand at a solid pace”.
Continues…
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