{"id":19593,"date":"2019-08-29T11:08:10","date_gmt":"2019-08-29T11:08:10","guid":{"rendered":"https:\/\/smh.group\/?p=19593"},"modified":"2023-02-15T13:50:09","modified_gmt":"2023-02-15T13:50:09","slug":"flexing-a-ten-year-old-muscle","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/flexing-a-ten-year-old-muscle\/","title":{"rendered":"Flexing a ten-year old muscle\u2026"},"content":{"rendered":"\n

The US Federal Reserve has cut its main interest rate for the first time in ten years, but will it have a knock-on effect? <\/strong><\/p>\n\n\n\n

The last time the US central bank, the\nFederal Reserve, cut its main interest rate was in December 2008, in response to\nthe fallout from the financial crisis. That last drop was preceded by nine\ninterest rate cuts since September of the previous year. <\/p>\n\n\n\n

The final 2008 cut, ten days before\nChristmas, took the Federal Funds rate down from 1.00% to a range of\n0.00-0.25%. As the straight line on the graph shows, the rate remained there,\njust above zero, for the next seven years. It was subsequently gradually nudged\nup, a quarter of a per cent at a time, reaching 2.25%\u20132.50% last December.<\/p>\n\n\n\n

The new 0.25% cut announced from the\nbeginning of August was widely anticipated, although there were some investors\nwho had forecast a 0.50% reduction. The backdrop to this cut, however, is very\ndifferent from that of December 2008. Now the US economy is close to full\nemployment and, while growth did cool in the second quarter, it is still\nrunning year-on-year at 2.3%. In other times, such conditions would not prompt\na rate cut. The central bank is acting now because it wants to prevent the\neconomy slowing any further, at the end of an unusually long period of growth. <\/p>\n\n\n\n

On this side of the Atlantic, the European Central Bank has hinted that it could cut interest rates soon. Although the bank took no action in July, it did change its meeting statement to say that it \u201cexpects the key ECB interest rates to remain at their present or lower<\/em> levels at least through the first half of 2020\u201d. <\/p>\n\n\n\n

The Bank of England\u2019s next interest rate\nmove remains unclear after maintaining the current rate again for August. The\nvarious Brexit scenarios could see rates increased to protect a falling pound\nor as a gradual return to \u2018normality; or rates could be cut to stimulate the\neconomy. <\/p>\n\n\n\n

\u2018Lower for longer\u2019 has been a description of the path of interest rates since 2008. It is now beginning to become \u2018lower for ever\u2019. Make sure that if you have cash on deposit beyond a rainy-day reserve, you have a good reason for doing so. <\/p>\n\n\n\n

Contact one of our Chartered Financial Planners<\/a><\/span><\/strong> if you are affected by this on 0114 266 4432<\/strong> or info@smhca.co.uk<\/a><\/span><\/strong>.<\/p>\n\n\n\n

The value of your investment can go down\nas well as up and you may not get back the full amount you invested. Past\nperformance is not a reliable indicator of future performance. Investing in shares should be regarded as a\nlong-term investment and should fit in with your overall attitude to risk and\nfinancial circumstances. <\/em><\/h6>\n","protected":false},"excerpt":{"rendered":"

The US Federal Reserve has cut its main interest rate for the first time in ten years, but will it have a knock-on effect? <\/p>\n","protected":false},"author":4,"featured_media":19597,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[343,77,239,97,96,349],"class_list":["post-19593","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-banking","tag-financial-planning","tag-interest-rates","tag-investments","tag-savings","tag-us-federal-reserve"],"acf":[],"yoast_head":"\nFlexing a ten-year old muscle\u2026 - SMH Group<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Flexing a ten-year old muscle\u2026 - 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