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karhu

U K Interest Rates Certain To Stay On Hold

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http://www.iii.co.uk/news/?type=afxnews&ar...&action=article

Over in the UK, gilts were dealt a blow by an unexpectedly strong service sector performance in February which will undoubtedly weigh against the case for a Bank of England rate cut in the coming months.

The Chartered Institute of Purchasing and Supply's measure of service sector performance rose to 58.9 in February from 57.0 the previous month.

The latest reading is the highest since April 2004 and beats the corresponding figure in the 12-nation single currency area.

Analysts had predicted no change in the UK PMI.

A reading above 50 marks expansion.

Howard Archer at Global Insight described the release as "impressively robust".

"It will certainly boost Bank of England's confidence that the economy is improving, although much still depends on the strength of consumer spending going forward," he said.

The data makes certain that the Bank of England will keep interest rates unchanged next Thursday, he added.

The BoE has kept interest rates unchanged at 4.50 pct since August last year. Some analysts believe the central bank may be forced to deliver a rate reduction some time this year as overall economic growth disappoints and inflationary pressures fade away.

On this data we might even start to see some members voting for a rate rise.

And remember, Steve Nickell leaves in May.

Edited by karhu

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I must say I hadn't even considered than a cut was likely, if anything I'm expecting either no change or a 'suprise' rise in IR. There's a heck of alot of inflationary pressure starting to feed through even with council tax exluded from the figures.

With the Fed, ECB and even the Bank of Japan in tightening mood to suggest that the UK has much scope to cut rates...... well it could only come from the VI media.

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I must say I hadn't even considered than a cut was likely,

Let's just put that idea to bed, for good.

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The markets are now looking at consumers. If they are still spending then I think we're going to see the interest rate barometer swing toward and interest rate rise very soon.

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This is what I am struggling to understand. I would have thought that this sort of data would by now be showing signs of 'weakness'. Instead if these figures are correct , the data is coming in as "impressively robust". :blink:

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This is what I am struggling to understand. I would have thought that this sort of data would by now be showing signs of 'weakness'. Instead if these figures are correct , the data is coming in as "impressively robust". :blink:

That's the reason for low interest rates (below neutral as they are now). They stoke up the economy and suddenly it's back on fire. Then it's time to slow it down again, i.e. time to raise interest rates :lol:

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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