March was another strong month for stock markets across the world, continuing a now 5-month streak of positive global returns. Interest rates stayed the same in both the UK and US, although the Federal Reserve (the US central bank) indicated towards cuts in the second half of the year. Switzerland was the first European country to actually cut rates, with a 0.25% reduction to 1.50%.
Higher interest rates are associated with tighter monetary policy and have been employed in recent years to tackle rising inflation, so rate cuts are often interpreted as a positive sign that inflation has stabilised and things are looking rosier.
Basic economic theory suggests lower interest rates lead to more consumption and investment in an economy, resulting in higher growth levels and more money for all - before pesky inflation gets in the way and spoils the fun!
