Any chance the Federal Reserve had of raising rates this year may have been quashed Thursday, with the impetus coming not from home but from the other side of the Atlantic.
That's because the U.S. central bank will find it even harder to tighten monetary policy as one of its closest peers loosens.
"Given the role of the Fed and its global positioning with regard to the dollar, can it be the one central bank that starts to raise rates?" asked Quincy Krosby, market strategist at Prudential Financial. "It's highly unlikely, given their focus on keeping the U.S. dollar in a range."
The dollar is down about 3 percent this year against its global peers, but Fed officials worry that raising interest rates will strengthen the greenback and make financial conditions tighter.
The interconnected nature of the global economy has unequivocally spread to monetary policy. Central banks around the world have been racing to ease in hopes that low and sometimes negative interest rates, coupled with asset purchases, can spur growth and keep their respective currencies weak.
Even though the results of such policies have been less than overwhelming, the BOE's actions serve as a reminder that there's still no end in sight, and central banks will use every weapon they can muster.
"We've moved into the new frontier of monetary policy. Thus far it doesn't look successful, because they have to keep pushing," Krosby added. "It has the air of desperation."