Bank rate looks set to hit 3.5% Thursday 15/12/2022

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Bank rate looks set to hit 3.5% Thursday 15/12/2022

Postby rebbonk » Fri Dec 09, 2022 2:53 pm

Slightly better news for me, but dreadful news for many...

Bank of England predicted to hike interest rates further to 3.5%

In a crunch meeting, the nine members of the Monetary Policy Committee will make a decision that affects million of mortgage holders.


The Bank of England is expected to push interest rates even higher next week at its latest meeting, putting further pressure on mortgages.

In a crunch meeting, the nine members of the Monetary Policy Committee will make a decision that could push up the amount that millions of mortgage holders have to pay their banks every month.

The consequential decision is expected to push up the Bank’s base interest rate from 3% to 3.5% in December, to its highest for 14 years.

The expected 0.5 percentage increase will represent a slight cooling in rate increases, after the Bank’s MPC opted for a 0.75 percentage point rise last month – the highest single increase since 1989.

It will also be the ninth time in a row that the Bank hikes interest rates. Less than a year ago the rate was 0.1%.

Economists at Deutsche Bank said they expect the rate to increase to 3.5% at the Thursday December 15 meeting, predicting five of the nine-strong committee to opt for this increase.

“Some good news around softening inflation expectations and easing recruitment difficulties will allow the MPC to slow the pace of tightening, avoiding a second consecutive 75bps (basis point) hike,” they added.

“But the Bank isn’t out of the woods just yet.

“Persistent inflationary pressures alongside lingering labour market tightness should result in another ‘forceful’ hike.”

Andrew Bailey sought to cool market expectations for how high interest rates will ultimately increase at the previous meeting, amid improvements in the value of the pound and government borrowing rates since September.

Deutsche Bank has suggested that rates could push as high as 4.5% next year, drifting from the Bank’s own previous prediction of 5.25% last month.

However, experts at ING and Investec have been even more dovish, both predicting that the rate will peak at 4% next year.

ING’s James Smith, Antoine Bouvet and Chris Turner said in a note to investors: “When the Bank of England hiked by 75 basis points for the first time back in November, it seemed obvious that it would be a one-off move.

“The forecasts released back then suggested that keeping rates at 3% would see inflation overshoot (just) in two years, while raising them to 5% would see an undershoot.

“In other words, we should expect something somewhere in the middle, and that’s why we think Bank Rate is likely to peak at 4% early next year.”

They predicted that interest rate hikes could stop in February but suggested that continued wage pressures in the labour market mean the Bank could be “less swift to cut rates than the US Federal Reserve”.


Source: https://www.belfasttelegraph.co.uk/news/uk/bank-of-england-predicted-to-hike-interest-rates-further-to-35-42207891.html
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Re: Bank rate looks set to hit 3.5% Thursday 15/12/2022

Postby dutchman » Wed Dec 14, 2022 3:18 am

rebbonk wrote:Slightly better news for me, but dreadful news for many...

You might think so but a friend who recently took out a mortgage and whose employment is 'tenuous' to say the least just jetted off on an expensive Christmas holiday! I suspect he is by no means unique in that regard.

Put another way, the Bank's message - that people should cut back on discretionary spending - has not yet had the effect desired on the average consumer. :roll:
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Re: Bank rate looks set to hit 3.5% Thursday 15/12/2022

Postby dutchman » Thu Dec 15, 2022 9:47 pm

UK interest rates raised to highest level for 14 years

Image

The Bank of England has raised UK interest rates to their highest level for 14 years as it battles to stem soaring prices.

It increased them to 3.5% from 3%, marking the ninth time in a row it has hiked interest rates.

The rise will mean higher mortgage payments for some homeowners and those with loans at a time when many people are struggling with the cost of living.

It should also benefit savers, if banks pass on the higher rate to customers.

The Bank of England has been attempting to calm rising prices since the end of last year.

Inflation - the rate at which prices rise - has been increasing at its fastest rate for 40 years as the cost of food and energy soars.

Raising interest rates should, in theory, encourage people to borrow and spend less and save more. This should help bring down the rate of inflation.

At 10.7%, the inflation rate remains more than five times higher than the Bank's 2% target, but it eased slightly in November.

Bank of England Governor Andrew Bailey said it was the "first glimmer" that soaring price rises were starting to come down but there was still "a long way to go".

Announcing its latest rise, the Bank indicated it was likely to continue to increase interest rates next year.

It means that homeowners with variable rate mortgages or first-time buyers looking to get on the property ladder could face higher costs.

Following the most recent rate rise, people on a typical tracker mortgage will pay about £49 more a month while homeowners with a standard variable rate mortgage face a £31 jump.

:bbc_news:
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Re: Bank rate looks set to hit 3.5% Thursday 15/12/2022

Postby dutchman » Fri Dec 16, 2022 9:49 pm

dutchman wrote:
rebbonk wrote:Slightly better news for me, but dreadful news for many...

You might think so but a friend who recently took out a mortgage and whose employment is 'tenuous' to say the least just jetted off on an expensive Christmas holiday! I suspect he is by no means unique in that regard.

Put another way, the Bank's message - that people should cut back on discretionary spending - has not yet had the effect desired on the average consumer. :roll:

I was listening to American financial commentator on YouTube and he says it's the same story over there. The interest rate rises - which are much steeper than here - have had no discernible effect on consumer spending; restaurants have never been so busy and holidays are booked solid.
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Re: Bank rate looks set to hit 3.5% Thursday 15/12/2022

Postby rebbonk » Sat Dec 17, 2022 2:44 pm

Many may be having one last blow-out before they are hit by these changes. My daughter is protected until July of next year. If rates haven't started falling by then I think she's going to have a bit of a problem servicing her mortgage. Bank of daddy is unlikely to be coming to the rescue!
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