Friday, February 10, 2006
UK loans interest rates on hold- BoE at 4.5pc.
As widely expected the Bank of England kept interest rates at 4.5% for the sixth month running yesterday although some analysts now anticipate that slow economic growth will prompt a cut in the next few months.
It seems opinion is split with some calling for a rate cut and others of the opinion that the key driver behind the MPC’s caution is a fear that a rate cut could re-ignite the housing market. For now both policy makers and commentators alike will be watching the forthcoming data and attention will turn to the BoE’s next set of quarterly forecasts next week to judge which direction policy is heading.
In other UK news yesterday the global goods trade gap deficit unexpectedly widened slightly in December while the underlying goods gap hit a record. The global goods gap widened to £6.1 billion in December, higher than the £5.6 billion expected and slightly above the £6 billion in November.
Sterling fell a third of a cent against the dollar and hit a two week low against the euro after the numbers were released. The ONS said that using the Treasury’s estimate of growth the goods trade gap would amount to 5.4% of GDP, the highest since 1974.
In early trading this morning traders have been reluctant to buy the USD ahead of today’s U.S December Trade Data. Economists expect the deficit to widen to -$65 billion from Novembers -$64.2 billion which was the third highest monthly level ever.
With the current focus clearly on U.S Interest Rates the number may actually pass almost unnoticed unless it proves to be wide of expectations.
It seems opinion is split with some calling for a rate cut and others of the opinion that the key driver behind the MPC’s caution is a fear that a rate cut could re-ignite the housing market. For now both policy makers and commentators alike will be watching the forthcoming data and attention will turn to the BoE’s next set of quarterly forecasts next week to judge which direction policy is heading.
In other UK news yesterday the global goods trade gap deficit unexpectedly widened slightly in December while the underlying goods gap hit a record. The global goods gap widened to £6.1 billion in December, higher than the £5.6 billion expected and slightly above the £6 billion in November.
Sterling fell a third of a cent against the dollar and hit a two week low against the euro after the numbers were released. The ONS said that using the Treasury’s estimate of growth the goods trade gap would amount to 5.4% of GDP, the highest since 1974.
In early trading this morning traders have been reluctant to buy the USD ahead of today’s U.S December Trade Data. Economists expect the deficit to widen to -$65 billion from Novembers -$64.2 billion which was the third highest monthly level ever.
With the current focus clearly on U.S Interest Rates the number may actually pass almost unnoticed unless it proves to be wide of expectations.
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:45 AM 0 comments
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Thursday, February 09, 2006
Home loans rates face divergent interest rates outlook
At the Bank of Japan monthly monetary policy meeting the BOJ kept policy unchanged although there had been speculation earlier in the week that they could indicate a willingness to scrap their quantitative easing policy in which they flood the banking system with cash and keep rates near to zero.
The BOJ are now expected to keep short-term rates pinned near zero until at least late this year.
Closer to home The Bank of England announces its policy decision today at noon following its monthly rate-setting meeting. It is widely expected that rates will remain on hold at 4.5 percent for the sixth month in a row.
Ex Fed Chairman Alan Greenspan made the news last night just a week after leaving the Federal Reserve. He made some upbeat remarks on the U.S economy at several private events. According to one source, Greenspan suggested that the low level of long-term bond yields may mean official interest rates would have to go higher than they otherwise would to slow the economy.
Some market watchers were surprised he would discuss the economy so soon after leaving the central bank. Interest rate futures dropped and the dollar firmed after the reports of his comments circulated in the markets.
The BOJ are now expected to keep short-term rates pinned near zero until at least late this year.
Closer to home The Bank of England announces its policy decision today at noon following its monthly rate-setting meeting. It is widely expected that rates will remain on hold at 4.5 percent for the sixth month in a row.
Ex Fed Chairman Alan Greenspan made the news last night just a week after leaving the Federal Reserve. He made some upbeat remarks on the U.S economy at several private events. According to one source, Greenspan suggested that the low level of long-term bond yields may mean official interest rates would have to go higher than they otherwise would to slow the economy.
Some market watchers were surprised he would discuss the economy so soon after leaving the central bank. Interest rate futures dropped and the dollar firmed after the reports of his comments circulated in the markets.
# posted by Dr Search- Principal Consultant at the Search Clinic @ 9:23 AM 0 comments
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Tuesday, February 07, 2006
Inflation and job growth lead new FED's Bernanke's agenda
The new Federal Reserve Chairman Ben Bernanke vowed on Monday to do his best to carry out the central bank's mission of fighting inflation, fostering economic growth and nurturing a healthy jobs climate.
"Our mission as set forth by the Congress is a critical one," Bernanke said yesterday.
Fed Vice Chairman Roger Ferguson administered the oath of office to Bernanke on Monday, as he did privately last week. Bernanke's first day on the job was last Wednesday.
President Bush attended Monday's ceremony, marking only the third visit by a president to the Federal Reserve.
Before becoming chief of the Fed, Bernanke, 52, served as the president's top economist as chairman of the White House's Council of Economic Advisers.
"I came to trust his judgment, his calm demeanor and his sly sense of humor," Bush said.
Former Fed Chairmen Alan Greenspan and Paul Volcker also attended and were warmly applauded by staff members who lined majestic marble staircases leading to the event, which was held in a two-story atrium. The glass ceiling bears the coat of arms of the United States.
Greenspan, 79, the second-longest serving chairman of the Fed, retired last week after more than 18 years at the helm.
Bush praised Greenspan's stewardship of the economy during that time. Greenspan, he said, was perhaps the only central banker to achieve "rock star status."
A former Fed governor and Princeton economics professor, Bernanke said he recognized "taking up the challenge of leading an institution with such weighty responsibilities."
"Our mission as set forth by the Congress is a critical one," Bernanke said yesterday.
Fed Vice Chairman Roger Ferguson administered the oath of office to Bernanke on Monday, as he did privately last week. Bernanke's first day on the job was last Wednesday.
President Bush attended Monday's ceremony, marking only the third visit by a president to the Federal Reserve.
Before becoming chief of the Fed, Bernanke, 52, served as the president's top economist as chairman of the White House's Council of Economic Advisers.
"I came to trust his judgment, his calm demeanor and his sly sense of humor," Bush said.
Former Fed Chairmen Alan Greenspan and Paul Volcker also attended and were warmly applauded by staff members who lined majestic marble staircases leading to the event, which was held in a two-story atrium. The glass ceiling bears the coat of arms of the United States.
Greenspan, 79, the second-longest serving chairman of the Fed, retired last week after more than 18 years at the helm.
Bush praised Greenspan's stewardship of the economy during that time. Greenspan, he said, was perhaps the only central banker to achieve "rock star status."
A former Fed governor and Princeton economics professor, Bernanke said he recognized "taking up the challenge of leading an institution with such weighty responsibilities."
# posted by Dr Search- Principal Consultant at the Search Clinic @ 5:34 PM 0 comments
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