US Federal Reserve and Bank of England kept interest rates unchanged but left the door open for possible further hikes

The US Federal Reserve and the Bank of England held their policy meetings on Wednesday and today and both kept their key interest rates unchanged, in line with expectations.

Inflation in the US regained traction in past three months and signaled an end of larger downward trajectory, which keeps the central bank alerted.

On the other hand, significant slowdown in manufacturing sector in October sends strong warning of negative impact from high borrowing cost to the economy, though signals from the most recent reports from the labor sector were rather positive and suggest that the jobs sector remains resilient.

Markets await release of key report for this week – US October non-farm payrolls, which will provide more details of conditions in the labor sector.

Although the Fed stayed on hold and many see the latest decision as signal that interest rates have peaked, Fed Chairman Jerome Powell left the door opened for possible further hikes, depending on the economic conditions, though with probability of such action seen low for now.

The Bank of England held interest rates at 5.25%, the highest in 15 years, and showed no signs of possible rate cuts at any time soon, as it continues the fight with high inflation, which remains the highest among the group of world’s top economies.

The central bank kept its hawkish stance and signaled that interest rates would stay high for some time, with possibility of further tightening of the monetary policy if inflationary pressure rises, despite negative impact on the economy, which has so far narrowly escaped recession.