Interest rate rise could be sooner than expected
It feels like only yesterday that the new governor of the Bank of England was establishing his new regime of long term forecasting to add stability and reassure the markets. However this seems to have had the opposite effect of analysts trying to be the first to call them wrong on their decision in light of a stronger than expected UK economy. Where before rates were expected to be on hold until 2017 as the Bank waited for unemployment figures to fall below 7%, some analysts are predicting a rise as soon as 2015, with some calling for an immediate hike to take some of the pressure off the housing market. (Up 0.7% in October and 6.9% on the year)
The British pound has rallied against all other major currencies on the back of it.
The Eurozone go the other way
In a surprise to the markets the Eurozone has responded to recent weak data by cutting rates by 0.25%.
While over the pond
While quite the opposite is happening over in the US. As recently as last month, with the appointment of the “dovish” Janet Yellen as the new head of the Fed as February, all expectations were that the FED’s policy of financial “expansion” or plain old printing money and low rates were going to come to an end. This month it appears that Yellen will continue with the current FED’s line for the foreseeable future. This has led US markets to record highs this week.
Gold experienced its 7th consecutive fall in price this week and the metal is down 25% on the year as the Dollar continues to recover.
