We doubt that the US bailout of the Government Sponsored Enterprises Fannie Mae and Freddie Mac marks the end of the financial crisis. Indeed, the rebound in global equities has been short-lived and banks appear to have become even less willing to lend to each other. Perhaps the more significant development over the last month was the further fall in global break-even inflation rates. Such an easing in the markets’ inflation concerns will go some way to allowing policymakers to turn their attention towards supporting activity. We continue to think that the MPC will cut UK interest rates again before the end of the year and eventually to at least 3.5%.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services