Interest Rate Predictions
The Bank of England (BoE) is poised to elevate its primary interest rate by 25 basis points on September 21. This would be the highest surge in over 15 years, as revealed by a Reuters poll of economists. A significant portion of those polled believe there’s scope for even more rate hikes this year.
Inflation Trends in Britain Even
With a decrease to 6.8% in July from 11.1% in the prior October, Britain’s inflation rate remains the peak among major global economies. Projections indicate it’s likely to exceed the BoE’s 2% target for the foreseeable years, signalling possible further interventions by the central bank.
Expert Opinions on Inflation
Ellie Henderson from Investec commented, “The services price inflation remains consistent, but the Bank of England is likely waiting for solid evidence of a downturn. The bank’s policy of tightening might persist for a while.”
Predictions on Bank Rate Peaks
A dominant part of the survey participants foresee the Bank Rate hitting a high of 5.50%, in line with rate futures, and holding steady until mid-2024. Interestingly, close to half of the 65 respondents predict a sharper increase to 5.75% or beyond in the subsequent quarter.
HSBC’s Perspective
Economists at HSBC noted, “Post this potential final hike, the BoE may revise its guidance to be clearer. Yet, the Monetary Policy Committee (MPC) will have limited fresh data before their subsequent gathering on November 2.”
Views from Gilt-edged Market Makers (GEMMs)
Of the 16 GEMMs polled, nine anticipate a peak rate of 5.50%, while the remainder predict 5.75%.
Divergence Among Policymakers
Central bank policymakers hold a range of views regarding the direction of interest rates. BoE Governor Andrew Bailey hinted last week that the bank might be concluding its phase of rate hikes, subtly alluding to a possible September increment. Conversely, Catherine Mann, a recognised economic hawk, argued for a cautious approach, leaning towards higher rates if in doubt.
Economic and Inflation Forecasts
Forecasts suggest average inflation of 6.8% for this quarter, dwindling to 4.7% in the next, but consistently overshooting the 2% target until at least 2025. Britain’s economic growth is projected at 0.4% this year, with a minor uptick to 0.5% in 2024.
Economic Indicators and Property Market Trends
Despite an unexpected economic downturn in July, a notable 8.5% annual growth in average weekly wages could bolster demand, intensifying price pressures. The spike in mortgage rates to a 15-year zenith has caused a ripple in the property market. As per the Royal Institution of Chartered Surveyors, August witnessed the most significant property value drop in nearly a decade and a half.
Property Market Projections
A separate Reuters analysis predicts a 4% reduction in average UK house prices for this year, stagnation in 2024, with a potential uptick anticipated in 2025.
Bank of England’s Anticipated Interest Rate Hike Amidst Inflation Concerns
Interest Rate Predictions
The Bank of England (BoE) is poised to elevate its primary interest rate by 25 basis points on September 21. This would be the highest surge in over 15 years, as revealed by a Reuters poll of economists. A significant portion of those polled believe there’s scope for even more rate hikes this year.
Inflation Trends in Britain Even
With a decrease to 6.8% in July from 11.1% in the prior October, Britain’s inflation rate remains the peak among major global economies. Projections indicate it’s likely to exceed the BoE’s 2% target for the foreseeable years, signalling possible further interventions by the central bank.
Expert Opinions on Inflation
Ellie Henderson from Investec commented, “The services price inflation remains consistent, but the Bank of England is likely waiting for solid evidence of a downturn. The bank’s policy of tightening might persist for a while.”
Predictions on Bank Rate Peaks
A dominant part of the survey participants foresee the Bank Rate hitting a high of 5.50%, in line with rate futures, and holding steady until mid-2024. Interestingly, close to half of the 65 respondents predict a sharper increase to 5.75% or beyond in the subsequent quarter.
HSBC’s Perspective
Economists at HSBC noted, “Post this potential final hike, the BoE may revise its guidance to be clearer. Yet, the Monetary Policy Committee (MPC) will have limited fresh data before their subsequent gathering on November 2.”
Views from Gilt-edged Market Makers (GEMMs)
Of the 16 GEMMs polled, nine anticipate a peak rate of 5.50%, while the remainder predict 5.75%.
Divergence Among Policymakers
Central bank policymakers hold a range of views regarding the direction of interest rates. BoE Governor Andrew Bailey hinted last week that the bank might be concluding its phase of rate hikes, subtly alluding to a possible September increment. Conversely, Catherine Mann, a recognised economic hawk, argued for a cautious approach, leaning towards higher rates if in doubt.
Economic and Inflation Forecasts
Forecasts suggest average inflation of 6.8% for this quarter, dwindling to 4.7% in the next, but consistently overshooting the 2% target until at least 2025. Britain’s economic growth is projected at 0.4% this year, with a minor uptick to 0.5% in 2024.
Economic Indicators and Property Market Trends
Despite an unexpected economic downturn in July, a notable 8.5% annual growth in average weekly wages could bolster demand, intensifying price pressures. The spike in mortgage rates to a 15-year zenith has caused a ripple in the property market. As per the Royal Institution of Chartered Surveyors, August witnessed the most significant property value drop in nearly a decade and a half.
Property Market Projections
A separate Reuters analysis predicts a 4% reduction in average UK house prices for this year, stagnation in 2024, with a potential uptick anticipated in 2025.
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Chris Bishop
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