Economy Global’s Post

According to all 72 economists polled by Reuters, the Bank of England (BoE) will cut its Bank Rate by a quarter-point on Nov. 7 to 4.75%, but a near-two-thirds majority expect no change in December, suggesting the BoE will stick to a cautious approach. Inflation in the UK, plunged to a three-year low of 1.7% in September from 2.2%, below the BoE's 2% target. That leaves room for the Monetary Policy Committee (MPC) to cut rates next week after pausing in September. Overall, the British economy is still performing well, with the prospect of an increase in investment from British finance minister Rachel Reeves' budget due tomorrow. #uk #ukeconomy #boe #bankofengland #pound #interestrate #inflation #borrowing #mpc #news

Market brief - 16th Feb The UK #economy has been bumping along the bottom for a little while now and where #Q4 growth posted -0.3% contraction this has put us in a #technicalrecession.  #Hunt supports Bank of England independence, perhaps so he can blame them for any #recession on his watch, which he has done. Obviously.  We should expect business as usual from the #BankofEngland. They were already looking for the right point to cut rates, where a #ratecut wouldn’t risk reigniting inflation, and slipping into recession is unlikely to change this.  This is not a recession in the traditional sense and the rate cut solution will drive growth in due course, when #inflation is under control. The #dollarindex retreated recent highs, falling to 104.20, which was due to profit taking rather than any fears about a US recession, but this helped #Sterling back to 1.2600 against #dollar as the wider sentiment is that the recession will be short-lived. #GBP kicked off around 1.2590 against #USD, 1.17 against #EUR and #EURUSD was around 1.0765 on the open. #Finance #FxPlew #news

This afternoon (7 November 2024), the Bank of England (BoE) made the decision to cut rates by 0.25% down to 4.75%. The rate cut is within expectations for markets, coming off a decision to hold at the last meeting in September. Following this month’s rate cut, the BoE has signalled it’s unlikely we will see further movements this year as forecasts suggest Rachel Reeves’ budget would increase inflationary pressure on the UK economy. Our Head of investments, Mashud Rahman, Chartered MCSI explains more in his latest blog, which you can read here: https://lnkd.in/eVEWsh34 #bankofengland #rates #interestrates #markets #investments #financialplanning #investing #budget #autumnbudget

From Investment IQ. The Bank of England’s decision to cut interest rates to 4.75% marks a cautious shift as the UK navigates inflationary pressures and economic uncertainties. Morningstar 🔗 Read the full article on Investment IQ: https://incm.pub/4eqVVhu #investing #assetmanagement #wealthmanagement #finance

From Investment IQ. The Bank of England’s decision to cut interest rates to 4.75% marks a cautious shift as the UK navigates inflationary pressures and economic uncertainties. Morningstar 🔗 Read the full article on Investment IQ: https://incm.pub/48IsVRj #investing #assetmanagement #wealthmanagement #finance

Navigating the New Normal: Andrew Bailey's Rate Cut and Its Impact on FX Markets In a bold move, Bank of England Governor Andrew Bailey recently announced a significant rate cut, a decision that has sent ripples across global financial markets. This strategic shift aims to bolster the UK economy amidst ongoing challenges but comes with profound implications for the foreign exchange (FX) markets. 📊 Key Impacts on FX Markets:Currency Fluctuations: The rate cut has led to a depreciation of the British pound (GBP) as investors seek higher yields elsewhere. This weakening of the GBP can benefit exporters by making UK goods cheaper on the global market, but it also increases import costs. Investor Sentiment: Lower interest rates typically reduce the appeal of holding assets denominated in that currency. As a result, we may see a shift in investment strategies, with investors pivoting towards currencies from economies with higher interest rates. Market Volatility: Such significant monetary policy changes often introduce increased volatility in the FX markets. Traders and businesses engaged in international trade should brace for short-term unpredictability and plan their hedging strategies accordingly. Economic Growth: While the immediate effect on the FX market might be a weaker pound, the long-term goal is to stimulate economic growth. A robust economic recovery could eventually strengthen the GBP as confidence in the UK economy is restored. For those of us in the FX market, staying informed and agile is crucial. Understanding the broader economic context and anticipating potential market movements can turn challenges into opportunities. Let's continue to monitor these developments and adapt our strategies to navigate this evolving landscape. #Forex #Economy #Finance #BankofEngland #InterestRates #Investing #GlobalMarkets #AndrewBailey #FXStrategy #MarketAnalysis

The latest reading of the UK’s annual inflation rate has dropped for the second consecutive month, marking pre-Russia’s invasion of Ukraine level for inflation and offering further hope that the UK will drop back to its 2% target in the second half of 2024. Does this mean that the Bank of England will soon start cutting interest rates? “This data indicates that the UK is beginning to rein in inflation at a quicker pace than the US, highlighting a divergence between the two countries and prompting suggestions that the Bank of England may be in a position to start cutting interest rates sooner than the US Federal Reserve” comments Richard Flax, Chief Investment Officer at Moneyfarm. “However, while investors have started to increase bets that the UK central bank could be one of the early movers in cutting interest rates, officials continue to urge caution, pointing out that underlying issues and emerging geopolitical tensions may fuel further inflationary pressure.” What impact will this have on the UK #economy? “Officials and policymakers alike will also be keeping an increasingly close eye on unemployment figures, which increased to 4.2% in the quarter through February, up from 3.9% in the previous period. This suggests that while inflation continues to fall, interest rates continue to impact households and companies” concludes Flax. Let’s go back to the basics. What is inflation and what causes it? Follow up here: https://lnkd.in/e5jjfKG3 #CPI #inflation #costofliving #BoE #investments #savings #wealthmanagement #markets #moneyfarm

[Capital at risk] This morning’s data showed that headline inflation in the UK rose to 2.2% in July, up from 2.0% in June. The reading came in below the market expectations of a 2.3% growth, moving back above the Bank of England’s 2.0% target. “It is the first time CPI has risen since February 2023 after the BoE raised interest rates to 16-year highs to bring down inflation. The Bank of England acknowledged the battle against inflation is not done” comments our Chief Investment Officer, Richard Flax. “Monetary policy will need to stay restrictive for an extended period until the risks of inflation returning sustainably to the 2% target in the medium term have diminished further” concludes Flax. Let’s take a step back, what is inflation and what causes it? Follow up here: https://lnkd.in/e5jjfKG3 #CPI #BoE #investments #savings #monetarypolicy #economy #wealthmanagement #moneyfarm

As inflation has slowly but surely fallen, real yields on government bonds – the nominal yield less expected erosion due to inflation – have begun to look healthy again. Fears of an economic hard landing over the last couple of years have so far proven misplaced, meaning interest rates have stayed high for longer than expected, with government bond yields following suit. The chart shows how the current real yield curve for UK bonds contrasts with a couple of years ago. Back then, real yields were negative across the curve because inflation was spiking due to post-Covid bottlenecks in economic reopening while interest rates remained at the ultra-low levels which characterised the noughties. For investors looking to put their faith in UK bonds, this could be an attractive moment. #Inflation #RealYields #GovernmentBonds #EconomicOutlook #InterestRates

The Federal Reserve’s decision to cut interest rates while the Bank of England holds steady reflects a growing divergence in global monetary policy. The Fed’s 0.5% cut signals concerns over the U.S. economy's resilience, with the aim of stimulating growth by lowering borrowing costs. This could boost U.S. stock markets and consumer spending in the near term. However, it also suggests underlying economic vulnerabilities, which could create longer-term risks, particularly if inflation picks up again. In contrast, the Bank of England’s decision to maintain rates at 5% suggests that inflation control remains its primary focus. While this may stabilize the sterling pound and UK #bond markets, it could continue to strain on borrowers, particularly in sectors like housing and heavy industries. For the UK, tighter monetary conditions compared to the U.S. may also put downward pressure on growth and investment. Swap rates are expected to continue as is, maintaining lending rates at the current level. #Property #investors might have to wait a little longer to see lower rates especially in the #buytolet and commercial space as swaps continue to trade at high-5s. #fed #BOE #bangofengland #interestrate #UK #mortgages #economy #london