This article discusses the trend of global interest rate cuts, highlighting the Bank of England's and Reserve Bank of India's recent actions. It contrasts this with the uncertainty surrounding US interest rates, impacted by President Trump's policies and the strong US dollar. The article also touches on the impact of the strong dollar on companies like Amazon and mentions the Bank of England's revised growth forecast for the UK economy.
The Bank of England reduced interest rates by 25 basis points on Thursday, following a similar move by the European Central Bank on January 30. The Reserve Bank of India is also widely anticipated to lower its repo rate by 25 basis points when its policy meeting concludes on Friday. This trend of rate reductions across several economies reflects a concerted effort by policymakers to stimulate economic growth .
This stands in stark contrast to the United States, where the outlook for interest rate changes remains uncertain. It's unclear if the U.S. Federal Reserve will follow through on its forecast of two rate cuts in 2025, as made in December. The Federal Reserve's decision-making is clouded by the unpredictable economic impact of U.S. President Donald Trump's policies. Ahead of Trump's inauguration, the U.S. dollar strengthened, reaching its highest level in over two years, according to the U.S. dollar index. This has already impacted companies like Amazon, which attributed its reduced revenue expectations for the current quarter to the adverse effects of a strong U.S. dollar. Amazon's forecast projects a growth rate of 5% to 9% for the quarter, the slowest increase since the company's initial public offering in 1997. However, despite the revenue challenges, Amazon exceeded earnings and revenue expectations for the fourth quarter. The company is also positioned to surpass Walmart as the world's largest retailer. Meanwhile, the Bank of England cut its key interest rate by 25 basis points to 4.5%, marking its first rate reduction this year. All members of the monetary policy committee voted in favor of this cut, although two out of nine members advocated for a larger 50 basis point reduction. Bank of England Governor Andrew Bailey indicated that he anticipates further rate cuts in the year ahead. Additionally, the BOE reduced its growth forecast for the U.K.'s economy in 2025 to 0.75% from 1.5%
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