Published: Fri, August 03, 2018
Markets | By Josh Butler

Sterling stronger after the Bank of England raises rates

Sterling stronger after the Bank of England raises rates

India's largest mortgage lender, on Thursday raised lending rates by 20 basis points following Wednesday's policy rate hike by the Reserve Bank of India.

Borrowers not on fixed-rate interest are likely to see an increase in their loan repayments, but the lender has to legally give you notice in order to do this, subject to the terms and conditions of your account. An RBI repo rate hike usually sees commercial banks hike their respective interest rates on home, auto and other loans.

"Since the RBI is committed to bringing down inflation, they don't have a choice but to raise rates", said Rupa Rege Nitsure, group chief economist at L&T Finance Holdings. At its June meeting of the monetary policy committee, the central bank had hiked rates from 6 per cent to 6.25 per cent.

The BoE's nine rate-setters were unexpectedly unanimous in their vote to raise rates to 0.75 from 0.50 percent, the level at which they have spent most of the past decade apart from 15 months after the Brexit vote when they were cut even lower. Truth be told, the central bank's monetary policy actions have kind of punctured the shallow rate-hike regime theory propagated by the pundits of share-bazaar when the first rate-hike happened in June.

Any increase on Thursday would follow a similar rise in November 2017, when the MPC raised rates from a record low of 0.25%.

Investors are betting there is more than a 90% chance that interest rates will rise to 0.75%. Once this period is up, people on a fixed interest rate mortgage may see their monthly payments go up unless they remortgage and find a cheaper deal.

If financial market expectations are met, Britain's central bank should raise rates from 0.5% to 0.75%, taking the UK's base rate of interest to its highest level since March 2009.

Cairo zoo denies its zebras are really donkeys with painted stripes
Local radio station contacted the zoo's director, Mohamed Sultan, who denied that the animal was a donkey. The BBC noted this animal's curiously "small size and pointy ears" as well as the "black smudges on its face".

But it also said inflation - now running at 2.4 per cent - was set to rise slightly higher than it had predicted in May's set of forecasts after recent falls in the value of the pound and higher energy prices. If credit demand gathers further steam in the financial year's second half, banks might have to respond with hikes in response to the competition for raising of resources.

The Bank of England raised its benchmark interest rate to the highest level since 2009 in what may be its final blow against inflation before the United Kingdom leaves the European Union. He said the rate hike came on the heels of a meeting with Union Housing and Urban Affairs Minister Hardeep Puri to discuss measures to put real estate sector "back on track".

After Thursday's interest rate rise, interest rates stand at 0.75%, unemployment is forecast to fall below 4% and the United Kingdom economy expected to grow faster than the 0.2% in the first quarter of the year.

Nick Dixon, investment director at Aegon said "two factors have driven today's rate increase".

Providers hold government bonds to create the returns they need to pay their clients.

It said, various indicators suggest that economic activity has continued to be strong.

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