Mark Carney, the Governor of the Bank of England gave a speech on Guidance, Contingencies and Brexit at the Society of Professional Economists on the 24th May 2018. Essentially, the speech said the Bank was well prepared for any “potential path” of Brexit. What it didn’t mention was the rapidly expanding balance sheet.
UK interest rate hike expectations
The Monetary Policy Committee of the Bank of England meets on Thursday, May 10 to decide the direction of interest rates.
Following a weak UK Q1 2018 GDP growth of only 0.1%, the slowest since Q4 2012 (read here) and inflation falling from 2.7% in February to 2.5% in March (against a Bank of England target of 2%), the market is now pricing in a 17% of a rate rise in May. The market had factored in a 100% chance of a hike just a few weeks ago.
UK 10-year bond yields fell 5bps during the week. The 10-year bond now yields 1.4% (up 0.32% over the past year)
Continue reading “Weekly Overview: UK interest rate hike expectations; Argentina hikes interest rate to 40%; LIBOR OIS; US Money Supply growth accelerating again; Bank of Canada and Bank of England speeches”
UK households find themselves in a strange situation ten years on from the financial crisis. Interest rates have never been lower for both borrowers and for savers.
We assess the impact of potentially higher interest rates for households in the UK.
First, here are some household debt statistics, Continue reading “Impact of (potentially) higher interest rates on households in the UK”
The Office for National Statistics (ONS) and the Bank of England (BoE) both released UK data on March 29 and the data doesn’t look good. Key highlights include:
- The households’ saving ratio fell to an annual record low of 4.9% in 2017 (since comparable records began in 1963) as growth in households’ spending exceeded the growth of households’ income.
- Consumer Lending Outstanding (seasonally adjusted) excluding student loans hit a new record high £209.45 billion, higher than even before the financial crisis.
- Total Mortgage Outstanding (seasonally adjusted) hit a new record high of £1.38 trillion.
- Households accumulated slightly more debt in the form of loans in 2017 than they did financial assets for the first time since records began in 1987.
The Bank of England Governor Mark Carney delivered a speech titled “The Future of Money” at the University of Edinburgh on March 2, 2018. Goes without saying Cryptocurrencies came up. Continue reading “The Governor of the Bank of England is right on cryptocurrencies”
Here is a chart of the Bank of England base rate from 1975 till date, Continue reading “One chart that will make you wonder how a generation managed with high interest rates”
What a difference a year makes, these are the current 10 year government bond yields, Continue reading “Impact of interest rates in the US and the UK heading higher”