Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. We hope you will find this review to be of interest.

INTEREST RATES UP BUT NO RUSH TO RAISE AGAIN

The Bank of England (BoE) has raised interest rates for only the second time in more than a decade, but stuck to its previous guidance that any further monetary tightening is likely to be only gradual and limited in extent.

On 2 August, the nine members of the Monetary Policy Committee (MPC) voted unanimously to raise the official bank rate by a quarter of a percentage point, from 0.5% to 0.75%. This took interest rates to their highest level since March 2009.

After making the announcement, BoE Governor Mark Carney suggested it was likely that further rate rises would be required over the next couple of years, in order to fulfil the BoE’s obligation of keeping consumer price inflation at around 2%.

SFFS Economic Review_Aug 18

SFFS Economic Review_July 18Warm weather and wedding boost growth.

The UK economy picked up some momentum during the three months to May as the hot weather and royal wedding sparked a modest rebound from the lacklustre performance recorded in the early part of the year. Last month saw a new monthly reading of gross domestic product (GDP) launched by the Office for National Statistics (ONS). This showed that the UK economy grew by 0.3% in May, compared to 0.2% in April and zero growth in March, while the average growth rate across the three months to the end of May was 0.2%. Commenting on the figures, Rob Kent-Smith, Head of National Accounts at ONS, said: “The first of our new rolling estimates of GDP shows a mixed picture of the UK economy with modest growth driven by the services sector, partly offset by falling construction and industrial output. Services, in particular, grew robustly in May, with retailers enjoying a double boost from the warm weather and the royal wedding.”

Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future.

It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. We hope you will find this review to be of interest.

MPC vote boosts prospect of August rate hike:

Although interest rates were left unchanged following the Monetary Policy Committee (MPC) meeting on 20 June, an additional dissenting voice has increased the likelihood of a rate rise at the next meeting in August. The Bank of England (BoE) left interest rates on hold last month but by a narrower than expected margin after the central bank’s Chief Economist, Andrew Haldane, unexpectedly joined the minority of policymakers voting to raise rates to 0.75%. This left the nine-member MPC split 6-3 in favour of holding rates at their current level of 0.5%. Rates were increased last November for the first time since the financial crisis, and the MPC had looked set to sanction a second rise in May, until the release of weaker than expected first quarter economic growth figures. However, minutes from the latest meeting suggest the MPC expects the poor early-year growth to prove “temporary” and that the pace of growth is likely to have picked up during the second quarter of the year.SFFS Economic Review_June 18

Our monthly economic review is intended to provide background to recent developments in investment markets as well as to give an indication of how some key issues could impact in the future. It is not intended that individual investment decisions should be taken based on this information; we are always ready to discuss your individual requirements. We hope you will find this review to be of interest.

BoE Expects Economy to Bounce Back!

Updated Bank of England (BoE) forecasts suggest the UK economy is set to bounce back in the second quarter of 2018, despite continuing signs of waning consumer sentiment.SFFS Economic Review_May 18