Bank Of England Minutes Show Inflation May Be The Main Threat
While there are still some analysts in the stock market who are looking for a reduction in UK base rates, the minutes from the Bank of England meeting earlier this month showed a definite barrier to immediate base rate reductions. The vote was eight against one, but there does seem to be some conflicting views about the threat of inflation.
In reality the markets have written off any interest rate changes in the short term, but there are growing concerns that inflation may comeback to haunt the UK markets. The ever increasing price of oil has already led to a number of price rise in the economy and with little chance of a substantial fall in the oil price in the short term, there seems to be more pressure on the upside.
However, there seems to be a growing belief that the falling housing market may well keep inflation under control, severely denting the amount of money the consumer has to spend in the market place. There are even some so called “doves†at the Bank of England who believe that interest rates may actually fall further in August.
As we have mentioned on a number of occasions of late, the UK economy is proving very difficult to read at the moment, making forecasting near impossible.
Share this..
Related stories
Why do overseas investors still love the UK
While the UK economy continues to suffer we are seeing literally billions of pounds of overseas money, predominately from the Middle East, pumped into the UK economy. There have been a number of astute takeovers, property companies have reported approaches and there was the multi-billion pound investment in alternative energy just a few days ago. So why do overseas investment companies still lov...
Read MoreLloyds bank announces terms of fundraising
Lloyds bank has today announced that the company has received across-the-board support for a bond exchange program and the company's £13.5 billion rights issue. All in all, the company refinancing will total around £22.5 billion, an increase from the initial estimate of £21 billion. The £13.5 billion rights issue is a record in the UK in itself although this does grow when you also take into a...
Read MoreMervyn King Walks The Walk On Pay
While many top politicians and those in positions of power are prepared to talk the talk, very few of them actually walk the walk, with MPs a prime example. However, after hitting the City with stinging criticism of high salaries and large bonuses, it has just been announced that Mervyn King, Governor of the Bank of England, turned down a £100,000 a year pay rise when re-appointed earlier this y...
Read MoreWill we ever find a suitable regulatory system for the UK?
As the government issues yet another revamp of the UK regulatory system for financial markets there are serious concerns that the government's strategy is more short-term than long-term. By creating increased friction between the Bank of England and the Financial Services Authority (FSA), as well as bringing the Treasury in to oversee the system, there are great fears of turf wars within the regul...
Read MoreWhy is the cost of personal loans still rising?
While many of the headlines in the UK are taken up by the banking sector, the mortgage industry and the property sector, many people have overlooked the personal loans market which has proved very difficult to forecast over the last few months. Despite UK base rates remaining at 0.5% for some time, many personal loan rates have been increasing gradually over the last few months. So what is going o...
Read More