What's going on?

The Bank of England (BoE) said on Thursday that it wouldn�t be raising UK interest rates this month, and grumpy investors can�t stand surprises.

What does this mean?

Investors went into this update expecting the BoE to announce that it would be raising interest rates, largely because that�s exactly what it hinted at last month. So it was a real rug-pull when the central bank announced that it�d be keeping rates at their historic lows � especially given its admission that it�s expecting inflation to hit 5% by April next year. Still, the BoE had a solid justification: there are signs that consumer spending might be slowing down due to product shortages and the removal of government support. A rate hike, then, might only risk denting economic growth even more.

Why should I care?

For markets: Ditch the pound?

The BoE did say a hike�s likely to arrive in the next few months, but its decision means it�s still cheaper to borrow money in the meantime. That should encourage people and businesses to take out loans and spend their cash, which could be why a major UK stock market index rose following the news. The British pound wasn�t quite so lucky: lower rates for longer make the currency less appealing to international savers and investors, which might be why it fell against the US dollar.


The bigger picture: The Fed stays predictable.

The US Federal Reserve (the Fed) announced on Wednesday that it isn�t hiking interest rates either � not until the country�s unemployment rate improves. But at least investors got something they were expecting: the Fed said it�d start tapering its $120 billion-a-month bond-buying program by $15 billion every month, which could mean the support is gone completely by the middle of next year.