Holiday Rentals News - Pound pushed up on rate cut

Pound pushed up on rate cut

The pound was at a 26-year high against the dollar after the US Federal Reserve chose to cut the interest rate yesterday.

It traded at $2.08, a strength not seen since the early months of 1981, after the policy committee voted to make a quarter point cut to the 4.75 per cent rate taking it to 4.5 per cent.

The decision was made, despite growth in the economy, partly as a way of averting a possible housing market recession in the country.

However, director of economic research at Argus Research, Rich Yamarone, was reported by the Boston Globe as saying: "The Fed slashing rates in this environment is kind of like watching your neighbour start up a barbecue with a gallon of gasoline and a Zippo.

"You get the feeling that the Fed may be stoking one heck of an inflation inferno."

The pound was made especially attractive to investors on the back of stronger-than-expected UK house price statistics from Nationwide, putting paid to suggestions the Bank of England will make a similar cut to the base rate in the near future.

Nevertheless, inflation does remain a risk in the UK with oil prices recently jumping to $94 per barrel on the New York Mercantile Exchange.

This article was brought to you by holidaylettings.co.uk, the UK's No.1 holiday home website.
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