Dark days ahead for UK economy
Today's news headlines:
‘Bank of England raises rates sharply and warns of 13% inflation by the end of the year’. Following in the footsteps of the European Central Bank and the US Federal Reserve, the Bank of England’s Monetary Policy Committee voted to aggressively raise UK interest rates yesterday. This hike, the largest in 27 years, saw the rates increase by 50 basis points to 1.75% at midday on Thursday. BoE forecasts have predicted that inflation will rise to over 13% by the end of 2022 and not return to its 2% target for another two years, a prediction fueled largely by Russia’s restriction of gas supplies to the Eurozone, creating a surge in gas prices as winter approaches. (Financial Times)
‘UK house prices drop for the first time in a year, says Halifax’. According to mortgage provider Halifax, rising inflation and the cost of borrowing have been the leading cause of the first UK house price drop since June last year. While the 0.1% fall that was seen between June and July only gives a month-on-month insight, ‘a slowdown in annual house price growth has been expected for some time’. However, house prices are up almost 12% since last July, meaning that the average house will set you back £30,000 more compared with a year ago. (Financial Times)
The Pound dropped sharply in the immediate aftermath of the BoE interest rate decision yesterday but regained its strength throughout the rest of the day and overnight. Asian stocks have grown overnight despite US tension after Pelosi’s visit, and crude oil prices rose by almost a percent.
UK Halifax House Price Index m/m: -0.1% vs 1.4% last month
French Trade Balance: -13.1B vs -12.9B last month
Bank of England Chief Economist Huw Pill speaks: 12:15PM
Canadian Unemployment Rate: 1:30PM
US Unemployment Rate: 1:30PM
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