Bank of England

HenryTo · Posted: Sat Apr 19, 2008 11:10 am Post subject:

Hi Joe,

I think the Pound will stay strong against the USD in light of this latest rescue operations and the Bank of England's to cut rates in a more aggressive manner. There is a good chance we could see US$2 in the next couple of weeks.

However, the British economy is much more geared and leveraged towards the financial and real estate sectors than the U.S. economy - so my sense is that the British economy will be in a more dire situation going forward. With the relatively high Sterling and lack of a manufacturing base, they also can't export their way out of a recession, unlike what the US is doing now (e.g. auto manufacturing operations are now being relocated from Canada to the U.S. and Detroit is now aiming to ship cars to China, etc).

Over the next couple of years, I expect the Sterling to underperform the USD in a very dramatic way.

Best regards,

Henry

HenryTo · Posted: Sun Apr 20, 2008 3:43 am Post subject:

Specifics to be announced on Monday:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aJstgbHKxyMA&refer=home

rffrydr · Posted: Mon Apr 21, 2008 7:11 am Post subject:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=axwDLaiHVAL8

HenryTo · Posted: Wed Jul 09, 2008 1:02 am Post subject:

Bank of England to make its interest rate decision this week. Consensus is for the policy rate to stay at 5%. My sense is that the BoE will be cutting rates before the year is over:

http://www.ft.com/cms/s/0/5ee1ff70-4d14-11dd-b527-000077b07658.html

LaBelleInvestor · Newbie Joined: 14 Jul 2008 Posts: 14

I'd expect they'll stay at the same interest rate. They'll follow the Fed's wait and see approach, and see how much impact their rate cuts have had on the economy. I'd also expect at least another rate cut in the near future

HenryTo · Posted: Sat Aug 02, 2008 12:33 am Post subject:

Bank of England poised to make its interest rate decision next Thursday:
------------------------------------------------------------------------------------
What the Bank of England has to weigh up next week
Fri Aug 1, 2008 4:53pm BST

By Sumeet Desai

LONDON (Reuters) - The Bank of England is expected to leave interest rates on hold for the fourth month running next week as it continues to tread a fine line between a sharply slowing economy and rising inflation.

All 76 analysts polled by Reuters this week predicted the Bank's Monetary Policy Committee would leave borrowing costs pegged at 5 percent at the end of its two-day meeting on Thursday.

Policymakers were split three ways last month after what was term a "difficult decision" for all of them.

David Blanchflower thought a rate cut was needed to prevent the economy slipping into recession and Tim Besley wanted to hike rates to show the Bank was serious about fighting inflation. The remaining seven chose to leave rates on hold.

The bias appeared to be raising rates but the MPC will have new forecasts for next week's meeting which could show inflation undershooting the 2 percent target in two years' time.

Here are some of the main factors the Bank will be looking at.

INFLATION

CPI inflation hit 3.8 percent in June, nearly double the central banks' 2 percent target. It is expected to go higher still, perhaps exceeding 5 percent in the coming months because of the huge increases in household bills announced by utility providers.

GROWTH

GDP grew by 0.2 percent in the second quarter but surveys have been suggesting that growth could be even weaker than that.

HOUSE PRICES

House prices have already fallen nearly 10 percent from their peak and are expected to keep going down. Mortgage approvals, a good leading indicator of prices, are at a record low and the number of properties changing hands has also halved over the last year.

CONSUMER SPENDING

May's stunning rise in retail sales was reversed in June. But surveys and anecdotal evidence suggest retail sales are getting much weaker.

MANUFACTURING

The manufacturing sector may already be in recession, according to some surveys, but costs there also keep rising.

Sterling weakness also appears to be having little effect in boosting manufacturing.

JOBS

The labour market now looks as it is turning with unemployment rising. Homebuilders hit by the housing slump have announced thousands of job cuts.

PAY

The MPC's big bugbear is higher inflation feeding an inflationary spiral but so far there is little sign that sharp price rises are pushing up wage growth.

OIL PRICES

The sharp fall in the oil price still keeps it very high but may help depress inflation in the years ahead when base effects fall out of the calculation.