News Worms
News Worms


Sterling FALLS ahead of BOE interest rate meeting

Sterling FALLS ahead of BOE interest rate meeting

The Bank of England's decision to raise interest rates is the first hike since July 2007, when Gordon Brown had just taken over as Prime Minister from Tony Blair.

The latest Reuters poll strongly supported the view that the BoE will raise base rates to the 0.5 percent they stood at from March 2009 until August previous year, when they were halved to 0.25 percent after Britons voted to leave the European Union. All members agree that any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.

The weak pound since last year's Brexit referendum has ramped up the cost of goods imported into Britain, and therefore consumer prices.

A quarter-point rise will only take rates back to where they were before the last cut in August 2016, meaning that any impact is expected to be modest.

Today's rate hike-from 0.25% to 0.5%-does little more than reverse the cut in August 2016, in the immediate aftermath of the European Union referendum that officials feared would lead to a recession.

The BoE did not, however, alter its quantitative easing, or cash stimulus, policy, which it first embarked upon to encourage commercial lending after the financial crisis.

The Bank is looking to cool surging inflation, which has been sent higher by sharp falls in the pound since the Brexit vote.

From January, the Frankfurt institution will reduce its purchases of government and corporate bonds to €30 billion a month, from €60 billion at present.

The Bank's decision is expected to be announced during BoE Governor Mark Carney's address at 1230 GMT and it will be preceded by the results of a monthly survey of the British construction sector, expected at 0930 GMT, which could give some indication of the economic mood and the likelihood of a longer-term tightening cycle. However, he specified that the independent variable for that policy will be Brexit negotiations.

The immediate effect of a rates increase is on the disposable income of households.

United Kingdom bond and rates markets reflected traders' skepticism that rates will rise much more in the coming years.

Opinion is split, however, on whether the hike is a one-off or a sign of things to come.

Now, the fear is that inflation, stoked by the pound's sharp depreciation since the referendum, is running too far ahead of the central bank's 2% target. He explained that an increase of 0.25% on a £150,000 standard variable mortgage at 4.5% over 25 years would see payments rise by more than £20 per month.

'We assume that the MPC will raise rates slowly over the next two years, assuming a Brexit deal is visible by the middle of 2018, unemployment remains low and global growth holds up. JLL predicts that there will be steady, small rises up to 2.25% in its new property market forecast report.

follow

editors' picks

November 05, 2017
Mobile, Sprint Abandon Mega-Merger Talks
But in a joint statement Saturday, Sprint and T-Mobile said they were calling off merger negotiations for the foreseeable future. But President Donald Trump has also made populist comments on antitrust and prioritized job creation as a key platform.

November 05, 2017
Sen. Rand Paul 'blindsided' by alleged assault at his Kentucky home
Boucher is charged with one count of fourth-degree assault, and is being held in the Warren county Regional Jail on a $5,000 bond. The news release from Kentucky State Police Post 3 in Bowling Green did not describe the circumstances surrounding the assault.

November 05, 2017
StarCraft II: Free to Play Overview
You have to log in between November 8 and December 8 to claim that upgrade though. Learn more about the game at www.starcraft2.com .

November 05, 2017
American arrested in Zimbabwe for 'insulting Robert Mugabe'
Ms O Donovan was arrested in a pre-dawn raid on her home in Harare and taken to Harare Central Police Station on Friday. Earlier this year, she presented a talk at a re:publica digital culture conference on "How Zimbabweans Rebel Online".

November 04, 2017
Ezekiel Elliott will be allowed to play for Cowboys against Chiefs
The NFL said roughly 100 players were suspended for approximately 500 games over the past season and a half. If Elliott accepted a suspension without fighting it, for many people that would be an admission of guilt.

November 04, 2017
Mourinho reaches out of court settlement with Spanish tax authorities
But after the hearing Friday he admitted that he had paid the required fee charged by prosecutors to bring an end to the distracting case.

November 04, 2017
Manchester United's players deserve more credit, feels Jose Mourinho
Manchester United are preparing for their crunch clash against Chelsea in the Premier League at Stamford Bridge on Sunday afternoon.

November 04, 2017
Rafael Nadal Withdraws From Paris Masters
Rafael Nadal's wonderful season stalled unexpectedly when the Spaniard injured his right knee during the ongoing Paris Masters . I don't know what he would say, but I don't think the season is too long. "It's not the thing that I love to do".

November 04, 2017
SIA gets fancy with new A380 suites
Singapore Airlines has ordered five of these A380 planes, on top of 14 planes of the type already in operation. British Airways, with 469 seats, will be the only carrier with a lower A380 seat count after the revamp.

November 04, 2017
Syrian Army Targets Israeli Warplane over Homs
In a statement by Hezbollah, Haaretz reported that the Iranian proxy tried to emphasize the connections between itself and Hamas. It warned that it would intensify its response if stray fire from the Syrian conflict continued to fall in Israeli territory.