Threadneedle's outlook for the US Fed, and analysis of BoE and ECB

There were no surprises from either the Bank of England or the European Central Bank today, when both announced interest rates.

UK interest rates were left on hold at 5.0%, while the cost of borrowing in the eurozone was increased by 0.25% to 3.5%.

Quentin Fitzsimmons, Head of Government Bonds at Threadneedle Investments, commented: “Recent rhetoric from both banks had effectively told the market what to expect and, as a result, there was little change to UK and European bond yields after the announcements.”

Attention now switches across the Atlantic, where the Federal Reserve Board’s Open Market Committee will announce US interest rates next Tuesday. Fitzsimmons added:

“We are keeping a very close eye on data coming out of the United States, as this will determine future interest rate policy. What is clear is that the pace of economic growth is slowing down and we think that will prompt the Fed to reduce rates in the first half of next year. Payrolls data is due tomorrow and it will be interesting to see if that gives the Fed any further food for thought.”