US and UK central banks expected to keep interest rates on hold amid Iran peace deal
Summary
Central banks in the US and UK are expected to keep interest rates steady this week after a new peace deal in the Middle East helped lower oil prices and reduce inflation pressures. The US Federal Reserve and the Bank of England will announce their decisions soon, with their leaders focusing on how the peace deal might affect prices and the economy.Key Facts
- The US Federal Reserve is likely to keep its interest rate between 3.5% and 3.75%.
- Kevin Warsh, President Trump’s pick as Fed chair, will make his first policy decision this week.
- US inflation rose from 2.4% in February to 4.2% in May, the highest in three years.
- The Bank of England is expected to hold its rate at 3.75%, despite UK inflation being 2.8%.
- The peace deal in the Middle East opened the strait of Hormuz, dropping oil prices and easing inflation.
- The European Central Bank recently raised rates to 2.25% due to rising inflation in the eurozone.
- ECB President Christine Lagarde warned about “second-round” inflation effects, like wage hikes pushing prices higher.
- Analysts believe if the peace deal lasts, UK inflation could stay below 4%, possibly avoiding more rate increases this year.
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