An expert has raised concerns that the potential recession threatening the US economy could have a ripple effect across the Atlantic, affecting savers in the UK.
With the US stock market on shaky ground and facing significant turbulence as it approaches the halfway point of the third quarter of 2024, alarm bells are ringing.
The disappointing job creation figures for July, which fell short of Wall Street’s expectations, coupled with JPMorgan analysts forecasting a 50% chance of a recession, are adding to the anxiety.
In response to these troubling signs, it is anticipated that the US Federal Reserve will make substantial interest rate cuts of 50 basis points in both September and November, double the reduction recently made by the Bank of England. Such decisive action from the Fed could spell trouble for the UK economy as well.
Speaking to Sky News, CNBC business presenter Karen Tso highlighted the potential global impact, stating: “If this is the case and we’re talking about a change to monetary policy in the US, it could mean other central banks from the ECB to the Bank of England to beyond could be talking about more aggressive rate cuts.”
Tso also pointed out that finance ministers in Asia are already “coordinating action” in anticipation of the possible recession, assessing the robustness of their markets following recent commendations of the US’s economic resilience.
The repercussions of these forecasts are already impacting global markets, with the UK’s FTSE 100 experiencing a decline throughout Monday and the FTSE 250 dropping 2.83% by the close of trading.
In response, some UK lenders, including The Mortgage Works, have reduced their rates as low as 3.49% across certain products, effective from tomorrow indicating a possible trend for interest rates the markets continue falling.
