Rolling coverage of the latest economic and financial news
- Bank of England sets interest rates at noon today
- Bank could raise interest rates from 0.1% to 0.25%
- Inflation is rising, but factors could be temporary
- Why is the Bank of England considering an interest rate rise?
- Last night, US Fed started tapering its bond-purchase programme
- The Guardian view on the Bank of England: talking itself into a rate rise
Here’s Sky News on the impact that a rate rise would have on mortgage holders:
A 0.15 percentage point increase for a borrower with a typical £250,000 mortgage would add £228 a year to repayments, according to figures from investment platform AJ Bell.
The 74% of home loans where rates have been fixed for a set period - which include 96% of those taken out since 2019 - will not be affected immediately.
Did the governor of the Bank of England, Andrew Bailey, err in exaggerating the prospects of an interest rate rise? It seems so. Mr Bailey’s intervention, along with his chief economist’s, suggested the base rate might rise this week. City traders are now betting that it will do so – with the Bank’s rate-setting monetary policy committee (MPC) due to pronounce on Thursday.
The governor is now damned if rates rise – giving the impression that the central bank can be talked into a hike. And he is damned if they do not – because he signalled rises that did not arrive.
The economists David Blanchflower and Alex Bryson point out that, in the last MPC meeting in September, there was a 9-0 vote to keep rates at their current level of 0.1% as the “elevated global cost pressures will prove transitory”. Nothing has changed, say the academics, about that prudent judgment. One reason to raise rates would be to bring inflation to heel, but the economists say this is unnecessary. They compare Covid to a hurricane hitting an island. Once the storm recedes, everyone wants plumbers, roofers and electricians “whose wages rise dramatically for a while and inflation goes up temporarily. But eventually, after a few months, things get back to normal”.
Continue reading...from The Guardian https://ift.tt/3EIuu1o
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