Brexit risk fails to deter BoE from rate hike

The Bank of England (BoE) has raised its main policy interest rate from 0.50% to 0.75% – its highest level since March 2009 and the first hike above the post-financial crisis level. The Bank backed away from raising rates in February owing to a significant slowdown in growth. However, data on retail sales and production … Continue reading “Brexit risk fails to deter BoE from rate hike”

A spot of turbulence

Global markets hit a rough patch in early February. Equity markets sold off, commodities softened, credit spreads widened and capital flowed out of emerging markets as volatility bounced back sharply. There have been a range of explanations offered for this dislocation, from jitters over rising inflation to concerns that rising term premia could snuff out … Continue reading “A spot of turbulence”

What does a normal interest rate look like?

Markets have been worried that interest rates in the west are heading back to normal in a hurry. If rates go too high too soon they could damage the recovery and do more harm to shares. As the West agonises over the pace of putting up interest rates and winding down special monetary measures, the … Continue reading “What does a normal interest rate look like?”

UK interest rate rises to be earlier and greater than expected

Latest comments from the Bank of England (BoE) and its governor Mark Carney indicate that UK interest rates are likely to go up sooner and faster than previously expected.  UK policymakers’ concerns about inflation have prompted Schroders’ economists to bring forward to November their expectations of a rise in interest rates. Schroders’ Senior European Economist … Continue reading “UK interest rate rises to be earlier and greater than expected”

UK growth edges higher, but BoE likely to hold

The initial estimate of GDP growth for the final quarter of 2017 showed the economy maintained a sluggish pace of growth of 0.5% quarter-on-quarter. This takes GDP growth for 2017 to 1.8%, which is a fall from 1.9% in 2016, and the lowest annual growth rate since 2012. Slight growth pick-up is encouraging Within the … Continue reading “UK growth edges higher, but BoE likely to hold”

UK inflation breaches the BoE’s upper target

Higher food and energy prices have put further pressure on households ahead of the festive period. UK annual consumer price index (CPI) inflation rose to 3.1% in November – its highest rate since March 2012 and, more significantly, breaching the Bank of England’s upper target of 3%. The latest figures were higher than consensus expectations … Continue reading “UK inflation breaches the BoE’s upper target”

Should the Bank of England raise rates?

The Governor has warned us that a rate rise could happen soon. Markets have duly priced in an increase. The pound rallied strongly against the dollar, partly on that interest rate expectation. UK ten year rates and other longer term bond yields have adjusted upwards. The problem is that the economy is slowing. Treasury policy … Continue reading “Should the Bank of England raise rates?”

UK GDP growth remains sluggish

Latest figures from the Office for National Statistics show the UK economy saw a small pick-up in GDP growth, but the overall environment remains sluggish. The preliminary estimate shows second quarter GDP growth at 0.3% compared to 0.2% in the first quarter, and matching consensus expectations. To put the recent growth figures into context, the … Continue reading “UK GDP growth remains sluggish”

Consumers under pressure as UK inflation continues to rise

More bad news for UK households. The annual rate of consumer price index (CPI) inflation rose from 2.3% in March to 2.7% in April – higher than consensus estimates of 2.6%. Meanwhile, the retail price index (RPI) measure of inflation jumped from 3.1% to 3.5% over the same period, also slightly higher than consensus expectations. … Continue reading “Consumers under pressure as UK inflation continues to rise”

Increasingly hawkish language from the Federal Reserve

Although US economic growth proved somewhat disappointing during the final quarter of 2016, Fed policymakers appear ready to increase interest rates as soon as it becomes appropriate; indeed, Fed Chair Janet Yellen warned that an unnecessary delay in tightening could prove “unwise”.  Meanwhile, European investors faced fresh uncertainties surrounding Greece’s financial bailout. Leading equity markets … Continue reading “Increasingly hawkish language from the Federal Reserve”

UK inflation jumps as sterling fall starts to be felt

UK inflation beats estimates UK consumer price inflation hits its highest level for two and a half years.   The annual rate of UK inflation based on the consumer prices index (CPI) increased to 1.6% in December compared to 1.4% in the previous month – the fastest pace of inflation for two and a half years. … Continue reading “UK inflation jumps as sterling fall starts to be felt”

Will the UK consumer keep spending?

There have been alarms put round that the UK will witness a big squeeze on real incomes, leading to a reduction in consumer demand. The argument goes that the devaluation of the pound will cause substantial price increase, which will eat into wage increases and cause a fall in real incomes and spending power. The … Continue reading “Will the UK consumer keep spending?”

How investors can prepare for rising UK inflation

Various forces are conspiring to push UK inflation higher, here we discuss these and the investment implications of accelerating price rises. Given current economic headwinds, some have suggested that the era of extremely low interest rates and inflation is here to stay. However, a number of factors suggest that UK inflation is set to rise … Continue reading “How investors can prepare for rising UK inflation”

Oil and financials dominated in September

UK equity growth – UK equity indices rose during September, although short-term sentiment and market movements were affected by developments in the financials and energy sectors, and broader speculation over US monetary policy. The banking sector was undermined by a steep fall in the share price of Germany’s Deutsche Bank The price of oil received … Continue reading “Oil and financials dominated in September”