The Bank of England is considering going against the tide of prevalent monetary policy to raise interest rates, according to its chief economist, Andy Haldane. Amidst a global trade war and suffering business confidence, due to limiting the Brexit threat, the Bank of England would normally be expected to cut interest rates to jolt the economy. According to Haldane, however, the UK is set for “steady if not spectacular growth” in 2019. “… The time is nearing when a small rise in rates would be prudent to nip any inflationary risks in the bud,” he told Reuters. The UK last raised interest rates from 0.5% to 0.75% in August 2018, the second time since the 2008 financial crisis. The European Central Bank announced the second wave of quantitative easing while the US Federal Reserve is projected to cut interest rates more than once before the end of the year. Haldane seems to be pushing in the opposite direction. The UK has a tight labour market and the lowest … [Read more...] about Bank of England considers interest-rate rise
Interest rates
Dow, stocks rise on improved chances of an interest rate cut
Damian J. Troise Associated Press Published 11:56 AM EDT Jun 7, 2019 NEW YORK (AP) — U.S. stocks moved broadly higher for a fourth consecutive day as investors look to start June with a strong weekly gain after a downturn in May. Investors bought stocks and bonds after a report showing weaker-than-expected hiring in the U.S. in May appeared to increase the odds the Federal Reserve will have to cut interest rates in the coming months. Federal Reserve Chairman Jay Powell had signaled the possibility earlier in the week. The lackluster jobs report could be a sign that businesses are becoming more cautious as economic growth slows and the U.S. engages in multiple trade conflicts. Bond prices rose, pushing yields lower, also a sign that the market is worried about economic growth. The yield on the 10-year Treasury fell to 2.07% from 2.12% on Thursday. Banks, which rely on higher yields for profit from loan interest, fell broadly and held back gains for the financial sector. Job … [Read more...] about Dow, stocks rise on improved chances of an interest rate cut
Boost for Modi as India central bank cuts interest rate
India's central bank cut interest rates on Thursday in a boost to newly re-elected Prime Minister Narendra Modi as he grapples with sluggish economic growth and decades-high unemployment. The third snip in borrowing costs this year comes as central banks around the world adopt a move doveish tone on monetary policy amid a slowdown in the global economy. Modi, 68, stormed back to power last month with a greater majority despite question marks over his economic competence during his first term as leader of Asia's third-largest economy. The new government was dealt a twin economic blow as it took office last week when data showed rising unemployment and economic expansion falling to a five-year low. The Reserve Bank of India (RBI) said the benchmark repo rate -- the level at which it lends to commercial banks -- would be reduced by 25 basis points to 5.75 percent. It was the third consecutive reduction under governor Shaktikanta Das, a Modi ally who was appointed in December after his … [Read more...] about Boost for Modi as India central bank cuts interest rate
Sedlabanki retains Iceland interest rate
Likewise, the rate for overnight lending remained at seven per cent and the 5.75 per cent maximum will remain unchanged for 28-day certificates of deposit. The bank said that current conditions and inflation have been on target with last month’s forecast, noting that the North Atlantic nation’s currency has remained largely stable. The statement read, “The accommodative monetary stance has supported the economic recovery in the recent term. The rise in interest rates since August 2011 and the decline in inflation have withdrawn a considerable amount of that accommodation,” the RTT News agency reports. It added, “Whether the Bank’s nominal interest rates remain unchanged in the near term will depend, among other things, on whether the outcome of the forthcoming wage settlement review at the beginning of next year is consistent with inflation declining to the target.” … [Read more...] about Sedlabanki retains Iceland interest rate
Low interest rates ‘justified’ according to ECB policymaker
Low interest rates are justified by economic conditions in the eurozone and their impact on banks’ profitability should not be exaggerated, says ECB policymaker Francois Villeroy de Galhau.The ECB has said it is considering the need to mitigate the impact of its negative deposit rate on lenders’ profits. With a negative deposit rate, banks have to pay to park cash at the ECB, which they say hurts their profitability the longer the central bank keeps rates at current record lows.“Maintaining a low-interest rate environment is completely justified and necessary in light of the economic situation in the euro area,” said Mr Villeroy also governor at the French central bank.Speaking in his role as head of the French financial supervisor ACPR, Mr Villeroy said the issue of the impact of low rates on banks should neither be ignored nor blown out of proportion.“It would be an exaggeration... to say this is the only reason profits are under pressure: monetary … [Read more...] about Low interest rates ‘justified’ according to ECB policymaker