Interest rate under spotlight on Bank ‘Super Thursday’

The only thing that was lacking was spending and inflation which has prevented the Fed raising until now. Ross Walker and Vicky Pryce both questioned the underlying strength of the UK’s economic growth.

Already since then, a number of policy makers have suggested this could come earlier.

On the company news front, Numis reckons interim results from RSA Insurance (LONLRSA) have taken on less relevance given recent potential bid interest from Swiss insurer Zurich, but, be that as it may, it is expecting a significant improvement in profitability, as results from other insurers indicate the weather has been a lot kinder to the sector this year.

A hike to the base rate of interest by the bank would spell higher repayments for mortgage borrowers not on fixed rate deals but a glimmer of hope for savers who have seen the value of their nest eggs eroded by rock-bottom rates.

Bank of England Governor Mark Carney is about to swamp the market with a torrent of reports alongside the outcome of the most exciting policy meeting this year.

But the poll also assessed that two, and possibly three, of the nine members of the Monetary Policy Committee probably voted for a rate hike after wages started to rise more quickly recently and the crisis in Greece eased.

The short sterling contract for December fell by 3 basis points, pricing in more than half of a quarter percentage point move by the BoE by the end of this year.

Tomorrow’s session brings the first ever Bank of England (BoE) “Super Thursday”.

The pound is the only one of 16 major currencies tracked by Bloomberg to appreciate against the dollar in the past three months, even as most economists predict the Federal Reserve will raise its key rate first.

Richard de Meo at another forex specialist, Foenix, reckons a split decision on the interest rate is the most likely outcome, but in order for the market to get too excited it would have to involve a third MPC member joining the two recognised hawks on the committee. While Australia continues to face difficulties as a result of tumbling commodity prices, unemployment has been falling this year and the Reserve Bank of Australia seems fairly comfortable with the way things are, hence the decision to leave rates unchanged. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN.