Weekly Comment: Central Banks in the Spotlight: US Rate Cut and the UK’s Stubborn Inflation

2 minute read

Weekly podcast – Market overview

This week’s host Jack Bishop joins Richard Carter, head of Fixed Interest Research and William Howlett, Equity Research Analyst, to discuss recent market developments. Among the topics discussed: diverging Fed views, a softening US labour market, and resilient growth, whilst over in Europe fiscal pressures mount in both the UK and France, with banks in the spotlight facing new margin challenges and potential tax threats.

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Market overview – Richard Carter, Head of Fixed Interest Research

Last week was dominated by the Federal Reserve meeting where the Federal Open Market Committee (FOMC) delivered their first interest rate cut of the year, lowering the Fed Funds rate by 0.25% to 4.25%. The newly-appointed Stephen Miran, one of President Trump’s economic advisors, dissented by voting for a 50bps cut. The latest rate projections – know as the ‘dot plot’ – point to further gradual reductions from here but the Fed remains somewhat caught between persistent inflation pressures and a slowing jobs market.

Elsewhere, there was little to cheer in the latest UK economic data with inflation remaining at 3.8% in August and still likely to hover close to the 4% level for another month or so. UK government borrowing figures were also once again worse than anticipated at £18bn in August and all the signs are pointing towards a difficult budget in the Autumn especially with the OBR likely to downgrade their productivity forecasts.

Markets continued to power ahead though with US indices making new highs and European bourses also rising while UK equities declined modestly. UK 10 year gilt yields edged higher partly due to the borrowing figures. Looking ahead, a number of Purchasing Managers’ Indices (PMIs) are out this week while negotiations will continue in Washington to try and avert a US government shutdown.

Quilter Cheviot Approver 23 September 2025

Author

William Howlett

Equity Research Analyst

Jack Bishop

Investment Manager

Richard Carter

Head of Fixed Interest Research

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Weekly Comment: Central Banks in the Spotlight: US Rate Cut and the UK’s Stubborn Inflation

Weekly podcast – Market overview

Market overview – Richard Carter, Head of Fixed Interest Research