Forget Fed talk about rise of interest rates

Forget the Fed: talk about the rise of interest rates in the UK market is heating up

Improving the economy,
strengthening labor market and hawkish
comments of officials of the central
Bank – all this is happening in the US, but in
Our focus should be
United Kingdom, where the talk about growth
interest rates are becoming louder
lately. Martin Uil, one of
the most militant members of the monetary
Bank of England Committee, said this
week that the country should prepare for
increase the cost of borrowing is already
in August, according to Financial Times. increase
Rates may not be imminent, but it has
significant reasons, as they say
economists. They emphasize the difference
opinions of the members of the Monetary Committee
policies that have recently been
unanimous in their decision to keep
rates at record low of 0.5%.

Moreover, the conditions on
labor market are better than
expected. The data published on
last week showed that the pay
workers in the UK have become longer
– wages rose at the fastest
pace in nearly four years – only
over the past three months. "there is
enough momentum in the labor market
now and it can be assumed
that growth will continue", – says Simon French,
an economist at the investment
Company Panmure. "As for the decision
at the rate we have to look at everything,
say that some members of the Bank
England", – he added.

Inflation, which is now
well below the 2% target of the Bank of England
(Rose to 0.1% per annum in
May), and analysts say it is no
no crushing factors to raise
rates. But Will says FT, that growth
wages and low
unemployment indicate
tightening of the labor market, and probably
need a response, even if inflation
It was low for longer than
expected due to lower oil prices.

Another member of the Bank
England, Kristen Forbes last month
wrote in the London Evening Standard, that the low
Inflation – a temporary phenomenon, and that
Monetary policy should be
tightened, because the economy
It is recovering from the financial crisis. "AT
While it seems that the picture
Committee vote split again
In the near future, there is still time until the moment when the majority of
votes will be given in favor of the increase
rates"He said Jane Foley, senior
a currency strategist at Rabobank. "the
Yet, strong data
Wages in conjunction with the recent
hawkish comments from Forbes and now
– from Huila intensified speculation in the market about
that the Bank of England may raise
interest rates by year-end".
– she said. Speculation about
increases in market interest rates continue,
helping to make a push against sterling
the major currencies this week.

Nevertheless, analysts
do not expect the Bank of England will make its
progress before the Federal Reserve
system, which has long been keeping in
voltage markets – all hinting and hinting,
that soon raise base rates. "I
I think that they (the Bank of England policy)
want to see the first action of the Fed,
to assess what impact this will
markets"- French said. The Bank of England,
as the Fed keeps rates at record
lowest level since the beginning of the world
the financial crisis, to support
growth.

"I expect
UK to raise rates in February
– after the Fed – said the chief economist
Bank Berenberg Bank Holger Schmieding. –
Britain is closer to the area
euro, so she probably watches
carefully at what the Fed does. there is
some fear, so Mark Karni wants
more confidence and solves little
wait until rates will not increase
Fed".

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