The Bank of England lifted the cash rate by 0.25%, the 12th rise – to 4.5%. They held a press conference of over an hour, and mindful of the recommendations relating to the RBA review highlighting weakness in communication, I picked out some highlights from the UK session.
This includes the basic rationale for the rate rise, a discussion about the mortgage cliff, what caused inflation in the first place, and the impact on households. It was frankly a more grown up discussion – even if they still anchor inflation to supply chain shocks and energy issues. But their comments on Huw Pill recent comments were also significant.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Bank of England lifted the cash rate by 0.25%, the 12th rise – to 4.5%. They held a press conference of over an hour, and mindful of the recommendations relating to the RBA review highlighting weakness in communication, I picked out some highlights from the UK session.
This includes the basic rationale for the rate rise, a discussion about the mortgage cliff, what caused inflation in the first place, and the impact on households. It was frankly a more grown up discussion – even if they still anchor inflation to supply chain shocks and energy issues. But their comments on Huw Pill recent comments were also significant.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Chief Economist At The Bank of England Huw Pill this week argued that there was a need for restraint to contain inflation. He got significant reaction on socials.
And there is an argument that both Unions and Corporates have a vested interest in bidding wages and prices higher – its their job.
But we parse out this argument and highlight the missing actor which was responsible for creating inflation in the first place, and yet now appears to be blaming everyone else.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The Chief Economist at The Bank of England Huw Pill this week argued that there was a need for restraint to contain inflation. He got significant reaction on socials.
And there is an argument that both Unions and Corporates have a vested interest in bidding wages and prices higher – its their job.
But we parse out this argument and highlight the missing actor which was responsible for creating inflation in the first place, and yet now appears to be blaming everyone else.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest UK inflation statistics surprised to the upside, baking in more rate rises. Again, the pattern is different from what markets expected, so they repriced future rate expectations.
More evidence against those hoping for rate cuts anytime soon.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
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Overnight we saw the Bank of England and the ECB lift the target rate by 50 basis points.
The UK story appears to be one where inflation is easing a little though growth prospects remain weak into the medium term. In the ECB, inflation is perhaps more troublesome, and further rate rises are anticipated. But both are seen by the market to be the peak of this raising cycle (though with risks to the upside).
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Well clearly most central banks got the 50-basis point hike memo, as following the Fed yesterday, with the Bank of England, the ECB and The Swiss Central Bank all hikes their rates by 0.5%. Markets reacted with significant falls, as the higher for longer mantra is threatening future earning, while Treasury yields fell across the curve. This all does put the RBA out of line given its recent 25-basis point rises and suggests we in Australia are behind the ball – significantly. Hey, but then of course Australia is different – right?
U.S. stock indexes finished sharply lower on Thursday with the Dow Jones Industrial Average logging its biggest daily decline in over three months, as investors continued to digest tough talk from the Federal Reserve on inflation that revived concerns about a potential U.S. recession.
In the UK, Bank of England Governor Andrew Bailey said he saw “good news” in UK inflation figures that ticked down from a 41-year high, but there was a concern that consumer prices could leap again and that the central bank has more to do to prevent a wage-price spiral. Speaking after policy makers lifted their key rate a half point to 3.5%, the highest since 2014, Bailey said the risk is that inflation sticks around longer that the BOE is anticipating.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The UK inflation data come in hot today, signalling broad-based inflation, including across services. Gas, electricity costs and food costs were among the main drivers, offset small falls in petrol and used cars.
This suggests the Bank of England will need to hike rates some more – though that may depend on the Chancellors Budget tomorrow.
Go to the Walk The World Universe at https://walktheworld.com.au/
The Bank of England raised interest rates by the most since 1989 on Thursday but warned investors that the risk of Britain’s longest recession in at least a century means borrowing costs are likely to rise less than they expect.
The BoE increased Bank Rate to 3% from 2.25% and warned that the British economy might not grow for another two years – the longest slump in records dating back to the 1920s – if rates were to go up by as much as markets have recently bet. The pound tumbled after the decision, while London-listed stocks fell and UK bonds came under pressure.
“We can’t make promises about future interest rates but based on where we stand today, we think Bank Rate will have to go up by less than currently priced in financial markets,” Governor Andrew Bailey said, in an unusually blunt message.
The BoE said it now expects inflation will hit a 40-year high of around 11% during the current quarter, more than five times its 2% target. But it also thinks the economy has entered a recession that could mean it contracts in both 2023 and 2024 and shrinks by 2.9% in total.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
The Central Bank Rate Rise Pass The Parcel Continues... [Podcast]
The Bank of England raised interest rates by the most since 1989 on Thursday but warned investors that the risk of Britain’s longest recession in at least a century means borrowing costs are likely to rise less than they expect.
The BoE increased Bank Rate to 3% from 2.25% and warned that the British economy might not grow for another two years – the longest slump in records dating back to the 1920s – if rates were to go up by as much as markets have recently bet. The pound tumbled after the decision, while London-listed stocks fell and UK bonds came under pressure.
“We can’t make promises about future interest rates but based on where we stand today, we think Bank Rate will have to go up by less than currently priced in financial markets,” Governor Andrew Bailey said, in an unusually blunt message.
The BoE said it now expects inflation will hit a 40-year high of around 11% during the current quarter, more than five times its 2% target. But it also thinks the economy has entered a recession that could mean it contracts in both 2023 and 2024 and shrinks by 2.9% in total.
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants
