What’s going on here?

You wait ages for an interest rate cut, and two come along at once. On Thursday, the US Federal Reserve (Fed) and the Bank of England (BoE) both trimmed their key rates, one right after the other.

What does this mean?

Both central banks snipped their benchmark interest rates to about 4.75% from about 5%, but that’s where the similarities stopped. The BoE warned that it’d reduce rates only gradually from here on out – not least because it thinks the UK government’s new spending plans will juice inflation by a half-percentage point next year. Stateside, meanwhile, there’s a lot up in the air about how things’ll look next year (politically, economically, you name it), so the Fed didn’t make any grand predictions alongside its rate cut announcement. And given that the US economy’s still on the up, there wasn’t much pressure to do so.

Why should I care?

For markets: More is… less.

The UK’s new government spending plans include jacking up borrowing, which could well push the country’s inflation back up. That’s why economists are betting that the BoE will be forced to keep its key rate on the high side, just to keep prices relatively stable. So while the experts had been predicting a minimum of four cuts next year, they’ve notched that down to three. In the US, it’s a similar story: the newly elected president and his party’s potential sweep of Congress make tax cuts and import taxes (a.k.a. tariffs) likely. Both would ramp up inflation and probably prevent the Fed from being able to shrink interest rates. Traders have done that math, and they’re betting on just four rate cuts next year instead of five.

What’s going on here?

Between the US election results on Wednesday and interest rate cuts on Thursday, investors have been upping their bets on higher-risk assets.

What does this mean?

Lower US interest rates mean investors can expect slimmer returns on the safest of assets, like cash in the bank and government bonds. That’ll encourage them to buy into riskier things like stocks and crypto in the hopes of bigger profits. Not that they’ve needed a lot of encouragement this week: investors simply carried Wednesday’s post-election “risk-on” rally into a second day, as it became increasingly clear that the president-elect’s own party could have full control over the US government, removing any potential political blockers to its agenda. And making space in investors’ portfolios were bonds: they were sold off, and their yields rose (remember, bond yields move inversely to prices).

Why should I care?

Zooming in: Investors take their pick.

Proposals to lower tax rates for companies, loosen regulations for industries, and drive local US investment should all be a boon for the country’s stocks. So banks – which represent 5% of the S&P 500 – were rallying on hopes of a less restrictive set of rules. Meanwhile, carmakers Ford and General Motors raced higher on expectations that rolled-back EV incentives and emissions standards would rev up demand for their more profitable gas-guzzlers. And in crypto, bitcoin was hitting record highs, seemingly just because the incoming president commented in favor of digital currencies.

The bigger picture: Still plenty that could go wrong.

A lot needs to fall into place to keep America’s risk-on rally rolling, and loads of things could derail it. Campaign pledges like global trade tariffs – if they happen – could ignite inflation or spark an all-out trade war, and the effects could range from a longer spell of high interest rates to a full-blown recession. Given how much debt the US is carrying now and the amount it could rack up in the next few years, that might be pretty catastrophic.