The Bank of England Balance sheet has been expanding rather quickly recently

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.

Bank of England Balance Sheet October 2018
Data Source: Bank of England

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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 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’ saving ratio falls to the lowest ever on record as mortgage and consumer credit outstanding hits the highest ever

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.

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