Decoding the Federal Reserve & Bank of England Meetings

Hello and welcome back. It's the end of the week and we're going to focus on two major central bank decisions because we've had both the US central bank, the Federal Reserve, and also the UK's Bank of England leave interest rates on hold, which was as expected. But there's been lots of market action and there's definitely more than meets the eye from the top-level headlines. So we're going to try and break that down, talk a little bit about quantitative tightening, which you might, might not have heard. Some slight adjustments on the US side. They've also issued new forecasts, growth forecasts being cut, core inflation raised, unemployment nudged up a touch as well. So there's quite a bit here to, to go through. So Piers, maybe we could start with, with the Fed, uh, and I'll just kick you off with the main headline, which was they did as expected, keep rates at 4.25% to 4.5% for the second consecutive meeting. That's probably the least interesting part. What was the most interesting part for you?

Well, the most interesting part, God, there's so much in here, like little, little bits of quite, some of them quite technical tweaks, let's call them, and actually a whole set of them. And so it's really challenging, I think, overall to kind of try and piece it all together and come up with an overall, like, outcome. Is this meeting— is it dovish or is it hawkish? Um, so let's try and piece through them kind of one at a time. I think maybe— so first of all, every— so the Fed has a meeting every 6 weeks, but every other meeting So that's every 12 weeks, which means every quarter. So basically, the Fed meeting in the final month of each calendar quarter— so March being one of those— is a, is a more important one than the one, the meeting mid-quarter. And that's because they update a load of their forecasts, and they update what's called their dot plot matrix. Okay, so, so let's maybe start with their forecasts of So every 3 months they update their GDP growth forecast, their core inflation forecast, and their unemployment forecast. Okay, so obviously this is key, you know, really important thing for markets. Markets and economists, we're doing our own forecasts anyway, right? But obviously what the Fed think is key because they'll use those forecasts, their own, when they are trying to figure out what to do with rates. Okay, so Um, what they did with all of their forecasts was bad, and, um, because they downgraded their GDP growth forecast for this year. So they had it previously, um, at growth of 2.1%. They've taken that down to 1.7%. Okay, they've also downgraded growth for 2026, downgraded growth for 2027. All right, I mean, that's bad. Then within unemployment As you'd expect, if growth isn't going to be as good, unemployment rate— they forecast— the forecast has been taken higher. So for this year, they had been projecting 4.3% unemployment at the end of 2025, is now 4.4%. All right, tiny change, but look, that's going in the wrong direction. And then to compound all the bad news, so growth down, unemployment up, they also have raised their inflation forecast. So this is like stagflation. Right, where growth slows, unemployment rises, and yet inflation goes up. And that's the worst-case scenario because the Fed, that monetary policy lever which the, you know, you can like to use when growth slows and unemployment rises, you want to be cutting rates to try and stimulate growth, but you can't do that if inflation's too high, right? So they've raised their inflation forecast from 2.5% to 2.7%. For the end of this year, right? So all of their forecast changes are bad news. Um, so you would expect things like the stock market to sell off as a result of that. If you looked at nothing else, you'd think, wow, S&P is going to get slammed here. But the S&P went up and NASDAQ went up, and, and so it was like, okay, hmm. Hang on, there's got to be more info in here. So they didn't change interest rates, they made all their forecasts worse, and yet the market went up. And so the— I'd say the outlier and the surprising element of this meeting was actually the announcements they made about quantitative tightening. Excuse me. So they've decided to slow the pace of quantitative tightening. So I think we kind of perhaps need to just step back and, well, hang on, what the hell's quantitative tightening?

Right. Because most people will be thinking, I know quantitative easing, but I'm not so sure about quantitative tightening. So yeah, I guess you can think of it as, as a, I don't know why I always have this visualization of a submarine deck underneath the Bank of England with buttons and levers. And it's like those old school power station dials with like inflation and GDP and things like that. And there's basically this massive interest rate lever. And then someone during the financial crisis stuck on to this big old metal machine, this little QE thing, and it's basically a button that just prints money. And what's happening now is there's been another button stuck on underneath that, which is the extraction of this money essentially from the system. But perhaps you could give more of a technical answer rather than a visual I love it.

I wonder why is it in a submarine? That's what I want to know. We're gonna have to delve into that.

Welcome to my mind.

Yeah, very interesting. Um, yeah, look, this is about, you know, if on a— on, on its simplest level, the central bank is for controlling interest rates, all right? So they raise and lower interest rates to try and control inflation, try and get it in the sweet spot, and then, you know, that should facilitate sustainable economic growth and everyone's happy, all right? But after the financial crisis, we kind of went into this new world of monetary policy, I would say, where interest rates weren't enough. That lever wasn't strong enough to deal with the exceptional crisis that we found ourselves in. So they turned to this extra policy called quantitative easing, which is about controlling the money supply. And so QE, quantitative easing, is a stimulative policy where the Fed increases the money supply. I won't go into the technicals here on this podcast, but basically they print money, they create new money out of thin air because they're, they're the Fed, um, and they're the central bank. Okay. And then they pump it into the system. All right. Via, you know, usually buying safe assets like government bonds. So basically financial assets that are in the system, get replaced with cash. That's the Fed's new cash that they've printed. They'll buy those bonds, and here you go, here's the cash for that purchase. And it just increases the money supply. This makes liquidity conditions— because we had a credit crunch back in 2009, and this was about, right, inject the system with liquidity and let this system operate and function, and let's get this economy growing again. Okay. Um, so that's QE. The thing is though, right, the central bank, they went— we've been through— and look, it's not perhaps not so bad. Well, no, it is in, in the US. I mean, the Fed printed money like it was going out of fashion, okay? And we have this thing called the Fed's balance sheet. That's basically their portfolio, you know, what's the value of the assets that the Fed own through these kind of quantitative easing programs. All right, we talk about the Fed's balance sheet, and basically the balance sheet has ballooned out of all kind of into the stratosphere. And actually, the Fed right now— you maybe you can get the stat for me— but they own a certain portion of US government debt. Okay, and it's, um, I guess at a rough guess, you're going to correct me, but I might say something around about maybe, uh, probably 10, 15%. I don't know, I'm gonna guess here, maybe 15% of all US debt is actually owned by its own central bank. Okay, and that can get a little bit, hmm, a bit dodgy, right? So you don't want your balance sheet to balloon too much. But the problem was we then had COVID, and so then they had to print a load more money, right, as we were stimulating the economy. Now, ever since like 2022 of 2023, the Fed have been slowly, slowly, slowly, slowly reducing back this balance sheet. So they put the QE lever— they put it in reverse, okay? And they've been taking money out of the system super slowly to try and just get it back down to sustainable levels. Now, how slowly? Well, it's actually at $25 billion per month. How do they do this? Well, actually, they've got this portfolio of bonds, and these bonds are maturing, right? These are loans, so they'll have a mix of maturities in their portfolio. They might have some 5-year government bonds, some 10-year government bonds, some 2-year government bonds, whatever, right? And naturally, these bonds are maturing at certain times. All right, so when they mature, what does that mean? Well, actually, the government pays the central bank the loan back. So there's a money transfer from the Treasury to the central bank. So let's say— let's simplify it— let's say they, they own $1 million worth of 2-year government bonds that are reaching maturity in March of 2025, this month. So that was a loan. The government issued those bonds 2 years prior, okay? And the Fed has ended up owning those bonds. All right, so at maturity, fine, pay us the loan back please. The government pays back the $1 million to the Fed. Now that's actually taking money out of the system because that's taking money that the government has in their account and it's transferring it to the central bank. So that's money coming out of the system into the central bank. Now the central bank every month has loads of cash coming in from these maturities, and what they've been doing is reinvesting that cash to make sure the money supply doesn't change, except reinvesting all of it apart from $25 billion. So each month they hold back $25 billion worth of the cash they've received from maturing assets. Okay, just to make this clear, they are not directly going into the market and selling bonds. Okay, that would be a more aggressive form of quantitative tightening. So this is what they call the roll-off. They are reducing the Treasury roll-off from $25 billion a month to $5 billion a month. Okay, so they are slowing the speed of QT. They're not stopping it. They're still going to roll off $5 billion a month, hold back $5 million of cash. Well, you might say, well, what do they do with that $5 billion of cash? Well, they basically destroy it. That goes— that becomes— it's taken out of the system and destroyed. Okay, all right, so that's the kind of technical part. Let's just put this more simply. Um, they are reducing— because this is a tightening policy, it's the opposite of stimulus, right? But it's, it's so slow that it's hardly had much effect. But this is the Fed saying 'we are going to reduce that minor tightening policy that we had in place.' So you could interpret it as a positive thing. Less tightening, well, that equals good news, and maybe that's why the stock market fired to the upside in the initial reaction, because this was a bit of a surprise on the timing.

Yeah, I was just having a look to give some context on the numbers of the size of the Fed's balance sheet. Cause obviously you, you, you said a couple of things there like COVID. So going back and telling the journey, so pre-2008, so pre the global financial crisis, the Fed's balance sheet was $870 billion. So it was well below $1 trillion. Then obviously you had the GFC and you had, if you remember, Piers, 2008 Q1, 2010 QE2 and 2012 QE3. So this, this basically meant that they started buying different types of assets. So not just treasuries, then it was mortgage-backed securities. They expanded it. Then they made the program. Do you remember 2012 when the European sovereign crisis was all kind of kicking off? Then it was, we'll pledge to do open-ended asset purchases, which is then like the bazooka type style saying, look, look, we'll just do whatever is necessary here in order to safeguard the system. So the balance sheet in that period of 2008 to 2014 went from around a trillion in 2008 to $4.5 trillion by 2014. So we've gone from $800 billion pre-'08 to by 2014, $4.5 trillion. Then we had tapering and QT Lite, which is 2015 to 2019, Basically, this was just the Fed stopped expanding its balance sheet in 2014, and that's when they started QT. So the shift there was 2017, 2019, and actually it went from around $4.5 trillion to $3— it was at $3.8 trillion prior to COVID. Yeah, surprises me actually, because it exploded to $9 trillion during COVID in the early 2022. So it went from $3.8 to $8.9 trillion. Um, and then obviously, as you mentioned, it's been shrinking since. So yeah, just a bit of perspective, the numbers of where I think at the moment it's around 7.

Uh, yeah, it's actually below 6. It's 6.7 I've got here in my stats. So it's gone from that 8.9 down, back down to 6.7. Um, in terms of their reductions and actually I fact-checked myself because the proportion of US debt US government debt that the Fed owns is 11.7%. Okay, um, but look, so this is— now this isn't a surprise in that we were expecting this to happen at some point this year, right? And actually, if you go back to, uh, I think it was back to January, the, the FOMC meeting minutes actually spoke to this and showed that the Fed governors were considering ending QT earlier than planned. Okay, what does that mean? Well, we were thinking middle of this year they might end it, and then in the January meeting they said we might end it earlier due to— am I quoting from the minutes here— swings in reserves over coming months related to debt ceiling dynamics. Because look, Powell said, Powell said after this meeting, and when he was quizzed and asked about this in the press conference afterwards, he said that this was very much for kind of technical reasons that we are slowing QT a little bit earlier than maybe everyone was expecting. He said it was for technical reasons. Well, what does that mean then? Well, this is actually linked then to something called the debt ceiling. So the US government historically have had this self-imposed debt ceiling, and if they were to hit that ceiling, then there's that mechanism that means it's illegal for them to borrow any more money without Congress, you know, agreeing to raise the debt ceiling a little bit more. Okay, this has been the thorn in the side of US politics for years and years and years and years and years. There's always a ridiculous squabble and fight in Congress each time the debt ceiling's hit. As they get around, they try and argue and sort out, right, should we raise it? And they, they like to tie lots of other kind of policy items to the mix, and they come up with this ridiculously bloated deal, and it takes forever. And in the meantime, there's a risk that they might default because they can't borrow any more money, right? This is a self-imposed mechanism. Now, they got rid of the debt ceiling a couple of years ago, and this is kind of because of COVID reasons, right? They said, look, let— this is kind of crazy times, let's just sort of get rid of the debt ceiling for now. But they— it got reinstated in January, all right? So the debt ceiling is now back, and the debt ceiling is at $36.1 trillion, okay? So, and they're inching up towards that. And they're due to hit this debt ceiling this summer. We're not quite sure when exactly, just depends on actually how the economy does and tax revenues and, and so on, right? Tariffs, who knows, right? Are they going to generate revenues from tariffs, which might actually mean it prolongs? Anyway, so that's why there's uncertainty as to when the debt ceiling might hit. But right now, since the debt ceiling was reimposed in January, the Treasury is already started to kind of dip into their savings account to pay for stuff. Stuff like, well, federal workers who have a salary for working for the government, right? The government obviously has lots of outgoings each month, so they're starting to dip into their savings account because they're mindful that, oh, hang on, we're actually getting quite close to this debt ceiling. Let's dip into our savings. Okay, now Here's the thing. If the government decide to raise the debt ceiling, and they will, it's just going to be a real mess, but they'll get there and do it, right? Now, when they do, here's the problem. The Treasury will want to refill their savings account. How do they do that? They'll issue a little bit more debt than they ordinarily would need in order to bring in some cash and just stick it back into the their savings account. That draws liquidity out of the system because they're issuing debt. Someone's buying those bonds with cash. That cash is then coming into the Treasury's account. So that cash is coming out of the kind of main system and into the government's account, right? That withdraws liquidity out of the system. The problem is quantitative tightening also withdraws liquidity out of the system. Okay, so here's the Fed basically saying, we're going to get ahead of this. We can see this problem coming if we, the central bank and the government, at the same time have policy that's withdrawing liquidity from the system simultaneously. Then there's not going to be enough liquidity in the system, and we're going to have problems. Okay, so I think this is, as Powell said, for technical reasons they're reducing QT. Early to really just avoid liquidity credit crunch issues, you know, through the summer months.

And just to be clear then, this is one of the key reasons of what makes trading short-term news-driven events so incredibly difficult because of the complexity, everything you're describing. And I think the market was a reflection of that. Lots of kind of, uh, unexplainable market reactions to start with, and it looked like the market participants were second-guessing the moves because because you saw some quite big reversals as well, right?

Yeah, I mean, the market just did not know what to do with this. So like, just if you just take stocks, stocks rallied like immediately, you know, decent move to the upside. And I think there they're reacting to, ah, QT is being reduced. Awesome. That's a dovish move. And then they didn't really pay attention to the bad news in the report about reducing growth forecasts, increasing inflation forecasts, and so on. But then the following morning— so I'm talking about Wednesday night, the market rallied. Thursday morning, the market sold off the whole rally because I think they were piecing through this complex set of situations, thinking, well, all right, that QT thing, that is technical. Maybe it's not quite the dovish thing we thought, right? But then another curveball came along on Thursday afternoon because we had some housing data out of the US. The existing home sales, which was actually surprisingly really strong. And we've been really worried about the housing market, and that was one of the indicators that was flashing red that economists were using to say, hang on, economic momentum slowing down. And yet, bit of a curveball, existing home sales really strong. So actually the market rallied back to basically the top of the move we saw from the Fed meeting on Wednesday, okay. But now here we are Friday and it's sold off again. And actually, where, where's the S&P trading? Bang on the same price it was trading before the Fed meeting on Wednesday, even though we've been through some pretty big seesaw swings. Which pretty much sums it all up, which is this is a complicated report, really technical in places, especially with that quantitative tightening change. But ultimately Yeah, nothing's, nothing's really changed.

I got a quick, quick word then on the element of the dot plots, because you mentioned how this is a, a meeting of the Eight in a year that's more significant than the interim ones because of the Summary of Economic Projections is the official title. So what, what did we get from that information?

Yeah, so I think again, that's bad news for me. So basically, what is the dot plot matrix? So every, um, every 12 weeks the Fed update it. What is it? All of the voting members of the Fed have a dot. Each person has a dot. All right, and there's 17 people and they each have a dot and they're on the chart. They're asked to place their dot. Where do you think individually, where do you think interest rates will be at the end of 2025? Where do you think they'll be at the end of 2026, end of 2027, and then like in the long term? All right, so every member individually places their dot, and this is, this is their tool. This is the Fed's tool for forward guidance. It's the Fed telling us where they themselves think rates are going to go. Okay, so you have all these 17 dots for the end of 2025, and what we do is we basically take the median of all of the 17 and use that as guidance. That's what the Fed is telling us, that's where rates will be at the end of this year. Okay, and right now it's 2 cuts. Okay, the median dot is showing 2 25 basis point cuts this year. Okay, now the key here is how do these dots in the March meeting— now they've changed them and updated them How do they compare to those dots in December, the last time they changed it? And so we're basically looking for how these people at the Fed making these decisions, how is their thinking changed over the last 3 months? Okay, if you just take the median dot, it hasn't changed at all, which actually you could spin as being a positive because what's happened in the last 3 months? Well, Trump. Tariff uncertainty, growth slowing, inflation forecast going up— that's all bad news, right? And yet here's the Fed telling us, well, we're still going to cut twice. So you could think, all right, that's positive. So maybe that's another reason why the market went up. However, that's just looking at the median dot. If you look at all 17 dots and really look into it more deeply, The, the average dot has actually gone up. This is for rates at the end of 2025. And I would say if you're just looking at the averages rather than the median, that's, that's telling me one cut, not two. So there it's kind of hawkish, and that's, I would say, bad news. So again, quite very nuanced. You're really getting into the weeds here. Like properly. I can't remember getting so much into the weeds on a Fed meeting for a very long time, actually.

Look, there's, I've just spotted another weed over there in the corner. And that weed is called, it's a very special one, one close to your heart. It's a transitory weed. It only tends to come when we have a burst of rain. It pops its head up, but it won't be here forever, Piers. So for For some people who are new to markets, probably won't get my slight joke there, which was very bad, I know. But the word transitory, because transitory has returned. Powell's kind of opened up Pandora's box again when he was asked about the potential tariff-induced inflation from the whole Powell and tariff kind of situation with Trump. Just explain to me then, like, Transitory, a, just so we're clear, what does he mean by that term? And then do you believe it's transitory is the bigger question.

Of all the words in the entire English dictionary that he could have chosen to speak in this press conference, I cannot believe he picks this word. Um, quite hilarious. I mean, if you're a proper Fed geek like, like I guess I am. This is hilarious. Um, reason being, he pulled this word out back in 2021, was it? I want to say basically in 2021 inflation popped higher. This was post-COVID, all right? Supply shock, stimmy checks, demand went up. We had this real kind of inflation spike, and the Fed said Don't worry, don't worry about this inflation spike. It's transitory, meaning it's temporary. It's because of these weird COVID effects. Inflation's going to come back down. Don't worry, we the Fed don't need to do anything about it. We do not need to raise interest rates because inflation's transitory. He could not have been more wrong. Right, it was literally the biggest cock-up of the Fed, I like, in my career almost. And so this word transitory became famous for just Powell just getting it so spectacularly wrong. And here we are, and he has just rolled it out again, and now he's talking about tariff uncertainty, and he's saying Yes, you lot out there, you're worried about tariff uncertainty. You're worried inflation might go up because of these tariffs. But here's Powell saying, don't worry, it's transitory.

Yeah, he also, um, Powell also dismissed the University of Michigan spike. So this is like a consumer-led survey and how getting the pulse of consumers, uh, and he kind of discounted the spike in inflation expectations as an outlier. Which obviously is a sign the Fed isn't panicked about inflation. But I guess one of the mistakes fundamentally that for Powell, and I know it's like an impossible job, but you're trying to predict Trump like you're trying to predict COVID. It's something completely out of your hands. I just don't get why he even felt the need to say anything.

I mean, It's crazy. Unless he's just trying, well, there is one reason why. He's trying to just tamp, you know, pamper towards Trump, right? That's like a little Trump, here you go. I'll give you a little sort of acknowledgement here. I'll, he doesn't want Trump to get on Twitter or X after these meetings and start giving him a load of grief.

Of which he did. He said, he said, he said the Fed would be moves to uppercase, much goes back to lowercase, better off uppercase, cutting rates as US tariffs starts to transition or ease their way into the economy. He said, do the right thing. The 2nd of April is Liberation Day in America.

Oh, wow. Yeah. Well, I mean, look, it's quite weird. I've no, I can't remember another time where the Fed chair has picked out a specific economic data point and told us that it's an outlier, ignore it. Honestly, I cannot remember that ever happening, especially something like Michigan consumer— look, that's one of the reasons we talked about Michigan consumer sentiment turned a lot lower a few weeks back. We talked about this. It was one of those key lead indicators that maybe suggests the economy's losing some momentum. So here he is stepping out and going, don't worry about it, ignore it. Which again is another reason why markets initially kicked higher. They're like, wow, all right, that's, it's an interesting one. So look, there's so much in this report, but you've just mentioned the 2nd of April because maybe we can finish on that. So what does Trump call it? Liberation Day. So actually, if you're really— I was digging into, you know, my reading this week and that That's becoming the next big kind of moment. If you're thinking about broadly, you know, what's going on with markets this year, and if you look at US equities, it's been a really bad year, okay? And they've obviously sold off a lot, and we're not used to that. And like, everyone's trying to think, is this, is this buy the dip? Should we be buying the dip now, or is this just the beginning of a real proper correction into sort of, you know, are we going to go another 10% down? And the 2nd of April has been earmarked as the day that maybe we get the next test of that. And that's because that's the day Trump has earmarked for reciprocal tariffs to kick in. And so this is, we'll see. And the 2nd of April, well, what's that? It's only 2 weeks away, right? And so will they kick in? What will they look like? Are we going to get more detail about what these tariffs are going to look like in the next 2 weeks? And there's a new guy that's come in on Trump's team to work on the technicalities of these tariffs, because reciprocal tariffs— that's tariffs with— that, that's— remember, that is any country out there that has a tariff on a US product going into their country Well, the US will reciprocate by having the same tariff on the same product if it's coming the other way. All right, but that's super complicated because there's millions of products, and so there was a lot of uncertainty. How the hell are you going to even do that? But as we get closer, it looks like they're going to have an average. They're going to somehow compute some kind of average for each country and, and come up with a number, and that'll be the tariff that gets applied on the 2nd of April. So we want more detail on that, and we think it's going to come with this new guy that's joined their team. And so maybe this is peak uncertainty on tariffs, but maybe it's not, and that's the problem.

And talking of uncertainty, this is a good segue just to finish with the Bank of England. So Jerome Powell openly admitted uncertainty about the economic outlook, especially regarding what you were just talking about, trade policy and also inflation, which we've been talking about. Now, one of the things was I was reading the, um, the minutes from the Bank of England and it sounded like a trailer for a disaster series on Netflix or something. I was reading the minutes and basically here's what you had. You had Trump's volatile trade threats. So tariffs potentially coming 2nd of April, Ukraine war, instability in Europe, rising German military spending, gas price swings, Labour's potential tax changes in the UK. So it was like, it was just a catalogue of like when you say peak uncertainty, it almost felt so tilted with so much negativity that you've got to be like, right, this is I mean, I mean, famous last words. How much more can there be?

Well, right. I mean, and in Europe, you, yeah, you're the uncertainty. You've still got the Fed. I'm sorry, Trump uncertainty, even though obviously that's US policy, but obviously directly tariffs will directly impact Europe. Right. But then you've got the big change on the whole UK, Ukraine thing. And, you know, the need for Europe to seemingly have to step up on the military side to replace what's, you know, a reversing US Army. So there's a lot of uncertainty and normally that breeds negative sentiment. And you've seen that in US markets. But like, you know, if you look at some of these other indices, I know we're probably guilty of always talking about the US here on this podcast, but, you know, look at the DAX. That's the German stock market. You know, it's up there pretty much at the all-time high. Um, you know, you look at the FTSE 100, it's, it's not— basically the European stock indices have not pulled back to the same tune as the Fed, as the US stock indexes, but there's a lot of uncertainty, so we shall see. But yeah, the Bank of England then, yeah, well, didn't change rates, but there was a bit of nuance there as well. Do you want to talk about—

yeah, so the vote split. So yeah, just to be unique to the Bank of England, so like we have the dot plots that we were just talking about with the Fed, they don't exist outside of the Fed, as much as that's been a point of debate. So the Bank of England, what also makes them unique is that they have a unified release kind of moment where you get the interest rate announcement. You also get this thing called the vote split, which is when you have, I think it's still 9 committee members. And essentially you get the split of opinion between those who wanted to either hike, hold, or cut, whatever the case might be. But you also get the minutes at the same time. So the added complexity with the Bank of England, you get this like huge amount of information simultaneously followed then by a conference, uh, thereafter. So there's a lot going on here, but yeah, one of the things here was they kept rates at 4.5%, which was completely as expected, but the vote split was 8-1. So there was one person who was advocating for a 0.25% cut. Now that person is not surprising that they wanted to cut, but Piers, why, why was that actually quite an interesting point though on the specifics with, with Swati Dhingra?

Yeah, well, so you've always got to look at, well, what was the vote split last time? And the change in the split, does that give us information about the direction of travel for interest rates? So the— in the January meeting, the split was 7-2. 2 people wanted a cut, and actually one of those 2 wanted to cut 50 basis points. The other one wanted to cut 25. Then the other 7, no cut, right? So it's 7-2. Here we are now, this meeting, and it's 8-1. Less people— only one wants a cut now, and that was the person who wanted a 50 cut in January. They've changed their mind. They only want to cut 25 now. And the person who wanted to cut 25 in January now has actually changed their mind. They're on hold. So the direction of travel is hawkish. They are— there's now less chance of a cut just looking at that split. Balance.

Yeah, and the other thing I saw a journalist at Bloomberg point out, the Bank of England stressed that they, quote, no presumption of a preset path, close quote. So that's talking about over the coming meetings. This is kind of like that safety play of, yeah, look, well, yes, incoming data, well, you know, there's lots of uncertainty. A fun fact though was that the last time this phrase appeared the pace of rate changes shifted. And so could this be a hint at a longer pause or slower easing ahead was what they were trying to suggest.

Hmm. As Powell said, I don't know.

So, yeah, I mean, with the Bank of England overall, though, it's— I mean, it's a similar global picture, really. So UK Economy grew 0.1% at the end of last year, so pretty sluggish growth. The Bank of England slightly upgraded though their GDP forecast for Q1, but we're talking like 0.1 to 0.25%. Inflation's gone up, that has been increasing obviously, 3% in Jan, up from 2.5% in December. They project a rise further to around 3.75% by Q3 of this year. So yeah, I mean, this is the— inflation's the conundrum, it seems here. And the—

yeah.

Trump being at the epicenter of that. And like you said, I mean, the next 2 weeks is going to be short-term critical, it feels.

Absolutely.

All right. Well, look, we'll wrap it— we'll wrap it there. Um, forgive us if that was pretty full on. I know there was a lot of jargon and things, but I guess the main takeaway points here are from a, I guess, markets perspective. He said it at one point, actually strip it all back, not a lot's changed. Yeah. Which is a fair summation. I mean, there certainly is technical stuff that's going on. And actually, I think a learning point here is that there's actually a really big moment coming that's going to really define then perhaps the next leg in this market from a broader asset class perspective.

Cool.

Thanks very much, Piers, and thanks everyone for listening.

Pleasure. Have a good weekend.