Finance, Forex and Investments

Why have interest rates in the US fluctuated far more greatly than UK interest rates?

Yet, both our economy’s are in real trouble. Why is this, despite the fact that interest rates in the UK have remained fairly constant compared to US interest rates? Apart from the latest 1.5% rate cut of course, but that was only last Thursday.

Public Comments

1. Because US interest rates are controlled by the Federal Reserve, which, despite its name is owned by private banks. So there are a bunch of super rich, super powerful guys playing puppetmaster with our economy.
2. Lawrence's answer is "interesting" but has the facts upside down; UK interest rates are, in effect, imposed by the government, whereas those in the US are set by the "Fed" and are dictated by the conditions of the market...
3. It is very typical that Europe is late to the table. Usually European central bankers (ECB and BOE) wait to see if the US Fed can pull the world out of and economic slump before they act. However in most cases, their economies also recover later than the US.
4. the UK tends to be less willing to change interest rates than the US. the UK's conservative stance on monetary policy is why they aren't part of the Eurozone. It's also why the pound sterling is worth a lot more than the US dollar, although 30 years ago (before Paul Volker, basically) they were worth about the same. it means that the UK may have a slightly more severe swings, but in the long run, they are able to avoid devaluing their currency.
5. Correction for previous poster: The district banks are owned by commercial banks in the district. The Federal Reserve Board of Governors and the FOMC are not controlled by bankers. And investment bankers have nothing to do with anything. US interest rates have gone down because the Fed has been pumping money into the economy to relieve the liquidity crunch and putting inflation worries n the back burner. The Bank of England is giving higher priority to inflation.