The Bank of England is being tipped to cut interest rates next week as inflation shows weaker than expected growth and the economy continues to be hampered by rising unemployment.

A cut is now predicted by analysts at Goldman Sachs and Nomura and would help offset any that tax rises in next month’s budget

Goldman Sachs expects the Bank’s monetary policy committee (MPC) will vote 5-4 in favour of lowering borrowing costs by a quarter of a percentage point to 3.75% at its meeting next Thursday. In a note, analysts said inflation had “surprised meaningfully to the downside”.

They concede, however, that “the decision will be close, as there are still also arguments to look for a hold.” The note predicts that the MPC would require two rounds of voting, as was the case at its August meeting.

Inflation held steady at 3.8% for the third consecutive month in September, below expectations of 4%. This remains nearly double the Bank’s 2% target, but it is expected to have peaked and the underlying trend is for a steady decline into next year.

Official data showed that Scotland’s onshore GDP grew by 0.7% in the three months to August 2025, up from the growth of 0.6% in the three months to July 2025.

However, monthly GDP is estimated to have contracted by 0.1% in August 2025. This follows contraction of 0.3% in July and growth of 0.7% in June.

In Washington the Federal Reserve handed Donald Trump more good news with an interest rate cut as inflationary fears continue to be set aside amid concerns about a stuttering labour market.

The US central bank said it was lowering the target for its key lending rate by 0.25 percentage points, putting it in a range of 3.75% to 4%.

Chairman Jerome Powell said that there were “strongly differing views on how to proceed in December”. He added: “A further reduction in the policy rate is not a foregone conclusion, far from it.

“At a time when we have tensions between our two goals, we have strongly differing views. We haven’t made a decision about December.”

Trump hails ‘amazing’ meeting with Xi

Donald Trump has agreed to lower tariffs on China by 10% after his meeting with President Xi reached a settlement on “rare earths”, materials used in products such as mobile phones.

He described the talks, held at an air base in Korea, as a “great success” and an “amazing meeting”, adding that he would visit China in April next year and that Xi would visit the US “sometime after that”.

The flow of rare earths has been a key point of contention between the US and China.

“All of the rare earth [issue] is settled, and that’s for the world… This was a worldwide situation and not just a US situation,” Mr Trump told reporters. “There’s no roadblock from China anymore.”

He said that effective immediately, the US will reduce tariffs on all Chinese goods enacted earlier in response to the flow of chemical ingredients for fentanyl into the US.

Mr Trump noted that China will start buying large quantities of soybeans “which I appreciated”, he said. “It was an amazing meeting. He is a great leader.”

China’s benchmark Shanghai Composite Index has gained over 2% in the past five days, reaching a high this morning of 4,025.39 points.

Markets around the world posted gains over the week as US and Chinese officials tried to ease trade tensions, raising hopes of a trade agreement between the sides.

“President Xi is a great leader of a great country, and I think we’re going to have a fantastic relationship for a long period of time,” Mr Trump said, calling Xi a friend.

It’s the first time Trump and Xi have spoken in person in six years. Xi noted in his remarks, through an interpreter, that the two have spoken on the phone three times and exchanged several letters since Trump was re-elected last year.

“China and the U.S. should be partners and friends. This is what history has taught us and what reality demands,” Xi said.

Nvidia’s new record

Chip maker Nvidia has become the first company in stock market history to reach a $5 trillion valuation.

Danni Hewson, head of financial analysis at AJ Bell said: “It’s only a few months since Nvidia smashed through the $4 trillion mark, which goes to show how much markets have shrugged off tariff tantrums and re-embraced the AI trade.

“Zooming out a bit, it’s only seven years since Apple became the first trillion-dollar company, and in the US stock market that group has swelled to nine in seven years – all technology stocks except for Berkshire Hathaway.

“Of course, this is going to do nothing to dispel fears over an AI bubble, but the market seems keen to march on regardless. With Microsoft, Meta and Alphabet reporting after the bell today, and Apple and Amazon coming tomorrow, we’ll soon get an idea about whether the tech rally can be justified by earnings growth, for the moment at least.”