As the US central bank—the Federal Reserve increased the discount rate from 0.5% to 0.75% last week, there come an immediate assumption that the long period of low U.S. interest rates are coming to an end.
If that was the case in the U.S., could the UK be far behind?
The Fed Chairman Ben Bernanke has tried his best to allay fears that the central bank is going to remove the bowl in his most recent statement of the Congress. He noted that during the final demand grew at a moderate pace that the economy is not robust enough to be given up for the exceptionally low market interest rates. However, he also acknowledged that the policy should be tightened at some point. Nevertheless, the decision to raise the price, that banks pay to borrow overnight from the central bank, was not an empty gesture.
On the same day as Shadow Chancellor George Osborne are concerned about UK’s debt is downgraded, that the Fed chairman was peppered with questions about the U.S. national debt rating.