The Bank of England has raised interest rates from 0.5% to 0.75%, only the second rise in a decade. Currently, interest rates stand at their highest since 2009 and reflect what the Bank of England perceive as a general pick-up in the economy. Continue reading →
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Let us invite you to travel back in time to June 2016, to the day after the Brexit referendum. Meanwhile, across the Atlantic, campaigning in the US Presidential election is in full swing.
You are offered two glimpses into the future. The first is that two years on, the UK has apparently made no real progress in the Brexit negotiations. The second is that Donald Trump has been elected President and has had a successful meeting with Kim Jong-un. You would have dismissed both of them as ridiculous and yet that is exactly what June brought us, as Theresa May called yet another Brexit crisis meeting and President Trump met the leader of North Korea in Singapore.
…And then the President went on to announce a raft of tariffs on imported goods – from both China and Europe – which may well see the threatened global trade war develop. Both China and the EU were swift to announce retaliatory tariffs, and (unsurprisingly) June was a month in which none of the major stock markets we cover managed to gain any ground. Continue reading →
Figures released at the end of January revealed that the final quarter of 2017 saw the economy expand by 0.5%. The Bank of England has now indicated that the pace of interest rate rises could speed up if the outlook remains positive. Although Mark Carney and his colleagues voted to keep interest rates on hold at 0.5% at their latest meeting, they did indicate that the rates will need to rise “earlier” and by “a somewhat greater extent” than previously thought. As a result of the Bank’s comments, the value of the pound jumped by about 1% against both the dollar and the euro.Continue reading →
This last week has seen financial market corrections all over the world, with markets handing back the strong gains made since the start of the year. During discussions with clients this week some have asked why has this happened now? Ironically it all started with good news in the United States last Friday. This came in the form of higher than expected wage growth for workers. This in turn means that the US economy is doing well. But, at some point the Central Bank in America (The Fed) will have to increase interest rates to try and curb the rise of inflation.
Financial markets generally don’t like it when interest rates have to rise, although that sometimes this is inevitable. And so we have seen the equity markets react all around the world. There is a very old saying in finance – when Wall Street sneezes – the rest of the world catches a cold. And so this saying is still true today because with what happened in the US last Friday has sent a shock wave around the other parts of the world.
However, is this a start of a global downturn? Absolutely not in our opinion. The fundamentals of the global economy are still very strong. We are some way off a recession in many parts of the world, certainly in the US. It is just the financial markets having a little correction, that’s all. Ironically, we have had such a good run over the last 18 months or so that volatility (the downside of markets) has been something we are not used to. We have to get back to being used to it, simply because the way financial markets have been for the last 18 months is not really normal.
What should you do? If you have spare cash make use of the Impulse Save feature on the website, because it is a great time to add money to your portfolios. If you haven’t got spare cash do nothing, apart from stay off your website. As I always say ‘when financial markets are making the number one headline on the news, then you know it’s bad’ so leave off it for a while. Honestly, that is the best thing to do.
According to the Consumer Price Index, inflation is currently at 3%. This is the highest rate for over five years, meaning household budgets are being stretched further and further as the average pay is going up by just 2.2%. As the Bank of England has just announced the first base rate rise in over a decade, the pressure is likely to be on even more as mortgage costs will go up for many people as a result. So, here are our top tips to help you ease the impact of inflation upon your income. Continue reading →
After months of speculation, the Bank of England finally raised interest rates in the UK for the first time in over a decade. The increase from 0.25% to 0.5% might seem small, especially when you consider that the last time the interest rate was increased in July 2007 it was up to 5.75%, but the fact that interest rates are going up at all after more than ten years at rock bottom is significant. Continue reading →
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