Markets predict Bank of England will hold rates in May

Mark-Carney-with-bank-note-in-background-700.jpgMarkets are currently pricing in a 92 per cent chance that there will be no change to interest rates this month and just an 8 per cent chance of a rise, according to Hargreaves Lansdown.

A month ago the markets were pricing in a 98 per cent chance of a rate rise by May, the firm says, but gloomy economic news has altered perceptions.

Poor retail sales, slower inflation, disappointing growth figures and comments from Mark Carney playing down the chances of a rise have all impacted sentiment.

Hargreaves Lansdown personal finance analyst Sarah Coles says: “Back in early April, a rate rise at the May meeting was so widely predicted that it seemed nailed on.

“However, over the past few weeks, the picture has changed dramatically.

“A slew of disappointing data, and efforts by Mark Carney to talk down the chances of a rate rise, mean the markets are now pricing in the chance of a rise at just 8 per cent.

“Of course, a rate rise remains a possibility, but this is yet another ample demonstration of the futility of trying to guess the date of the next interest rate rise.”

SPF Private Clients chief executive Mark Harris adds: “What we have seen is a number of lenders raise mortgage rates in recent weeks on the back of higher Swap rates but they are still very reasonably-priced as lenders compete for business in a fairly subdued market.”

Recommended

Mark-Carney-with-bank-note-in-background-700.jpg

Bank of England holds rates but hints at increase soon

The Bank of England has held the base rate at 0.5 per cent, but its committee minutes suggest rates will rise more quickly and more sharply than previously expected. Monetary Policy Committee members voted unanimously in favour of leaving interest rates unchanged for now. Their report released today says: “Were the economy to evolve broadly […]

Bank-of-England-BoE-Building-Horse-700x450.jpg

Bank of England base rate rise predicted for coming months

The next Bank of England base rate rise may happen as early as May economists are suggesting, with the effect likely to be greater than last year’s rise according to brokers. The Bank of England’s Monetary Policy Committee is due to announce its latest decision on interest rates on Thursday. The Bank has previously hinted […]

Bank-of-England-Building-BoE-Bus-700x450.jpg
1

Mortgage lending slump in December: Bank of England

Mortgage lending fell for both house purchases and remortgaging in December according to the latest Bank of England figures. Lending for house purchases was just £11.5bn for the month, the lowest level since January 2015, indicating signs of serious slowdown in the housing market. There were 61,039 loans for house purchases made during the month. […]

Thumbnail

Neptune video: Abenomics: the impetus for Japan’s fast-track recovery?

The remarkable performance of the TOPIX over the past year has caused many sceptical equity investors to look again at the Japanese market. These returns have come despite very significant problems facing the Japanese economy. Chris Taylor, manager of the Neptune Japan Opportunities Fund, discusses these problems and whether Abenomics will be able to overcome them, enabling the market to continue to rise.

In the video, Taylor addresses the following:

• The size and speed of Japan’s unprecedented monetary policy
• Abenomics and the implications should it fail
• Corporate Japan and beneficiaries of government policy

Newsletter

News and expert analysis straight to your inbox

Sign up