LONDON (Reuters) - The central bank cited above-target inflation as one reason for raising interest rates last week and figures on Tuesday could signal its work is not yet done.
Economists polled by Reuters expect consumer price inflation to rise to 2.6 percent in October. Such a reading would be the highest since the series began at the start of 1997 and the sixth consecutive month inflation has been above the bank's 2 percent target.
The biggest upward effect on prices is expected to come from university tuition fees, which have risen 150 percent this year for new students. The Bank of England has already said it expects higher tuition fees to add 0.25 percent to the headline index.
"A mammoth jump in university tuition fees, continued upward pressure on domestic utility bills and food price base effects point to a jump in the October inflation rate," says Alan Clarke at BNP Paribas . "We expect an acceleration to 2.6 percent with risks skewed to the upside."
Retail price inflation, the measure on which most wage deals are based, is also forecast to rise to 3.8 percent -- its highest in more than eight years.
The timing of such a rise ahead of the crucial January pay round will keep policymakers nervous of a wage-price spiral developing, although there has been little sign yet of this happening.
The latest wave of utility bill rises will also impact this week's inflation figures. Nevertheless, with global energy prices now declining, analysts expect fuel costs may soon come down.
"Overall, we expect the upward influences of rising utility bills and tuition fees to be at least partly offset by falls in petrol prices", says Capital Economics.
The London-based consultancy is forecasting a below-consensus inflation reading of 2.5 percent and says the risk of inflation rising above 3 percent -- a level which would require the Bank to write an explanatory letter to the government -- has receded.
Data on Monday showed weaker oil prices were already putting downward pressure on producer prices, with factory gate inflation its weakest in more than two years.
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Tuesday, November 14, 2006
Thursday, November 09, 2006
looks like interest rates will rise today 9th november 06
The Bank of England looks all but certain to raise interest rates by a quarter-point later on Thursday but analysts are divided over whether borrowing costs will then have to rise again early next year.
BoE Governor Mervyn King said recently there was no such thing as a "done deal" but all 58 analysts polled by Reuters last week disagreed, predicting the central bank's Money
Policy Committee would lift rates to 5.0 percent at noon.
That would take them to their highest level since the September 11 attacks on the United States prompted the most aggressive round of global monetary easing in decades, and puts borrowing costs 150 basis points above the 48-year low hit in 2003.
"A 25 basis points interest rate hike to a five-year high of 5.0 percent on Thursday looks mightily like a done deal to us," said Howard Archer, chief UK economist at Global Insight.
Policymakers are worried that inflation -- already running above the BoE's 2.0 percent target may climb further and prompt higher wage demands in the New Year pay round.
The price measure on which most wage deals are based was running at an 8-year high in September as high petrol and home utility bills raised the cost of living for most Britons.
So far there has been little sign of a wage spiral but the MPC has repeatedly indicated it wants to send out an uncompromising message to bosses and workers alike that it will not allow big pay deals to fuel inflation.
GOVT GIVES GREEN LIGHT
The government, in the form of Treasury minister Ed Balls, also appears to have given the central bank a green light to tighten the screws by warning that policymakers have to be vigilant.
The two newest members of the MPC -- Andrew Sentance and Timothy Besley -- wanted to hike rates in October.
Most of the others thought it better to wait for the analysis of their November forecast round but judged the case between hiking rates and keeping them steady finely balanced.
Much of the economic news since has been pretty strong.
House prices, particularly, keep surprising on the upside, showing no sign that August's surprise hike has deterred property-mad Britons from taking on even more mortgage debt.
The respected National Institute of Economic and Social Research said this week the BoE would not only have to raise rates on Thursday but again in the early months of 2007.
Other economists, however, are not so sure.
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There is uncertainty over the course of U.S. economy and how fast it is slowing. Consumers at home, meanwhile, may already be buckling under the weight of their debts and may not easily be able to swallow higher borrowing costs.
The number of people declaring themselves insolvent hit a record in the third quarter.
"(5 percent) should be the peak," said Jonathan Loynes, chief European economist at Capital Economics. "We still expect the MPC to be back in loosening mode before the end of next year."
BoE Governor Mervyn King said recently there was no such thing as a "done deal" but all 58 analysts polled by Reuters last week disagreed, predicting the central bank's Money
Policy Committee would lift rates to 5.0 percent at noon.
That would take them to their highest level since the September 11 attacks on the United States prompted the most aggressive round of global monetary easing in decades, and puts borrowing costs 150 basis points above the 48-year low hit in 2003.
"A 25 basis points interest rate hike to a five-year high of 5.0 percent on Thursday looks mightily like a done deal to us," said Howard Archer, chief UK economist at Global Insight.
Policymakers are worried that inflation -- already running above the BoE's 2.0 percent target may climb further and prompt higher wage demands in the New Year pay round.
The price measure on which most wage deals are based was running at an 8-year high in September as high petrol and home utility bills raised the cost of living for most Britons.
So far there has been little sign of a wage spiral but the MPC has repeatedly indicated it wants to send out an uncompromising message to bosses and workers alike that it will not allow big pay deals to fuel inflation.
GOVT GIVES GREEN LIGHT
The government, in the form of Treasury minister Ed Balls, also appears to have given the central bank a green light to tighten the screws by warning that policymakers have to be vigilant.
The two newest members of the MPC -- Andrew Sentance and Timothy Besley -- wanted to hike rates in October.
Most of the others thought it better to wait for the analysis of their November forecast round but judged the case between hiking rates and keeping them steady finely balanced.
Much of the economic news since has been pretty strong.
House prices, particularly, keep surprising on the upside, showing no sign that August's surprise hike has deterred property-mad Britons from taking on even more mortgage debt.
The respected National Institute of Economic and Social Research said this week the BoE would not only have to raise rates on Thursday but again in the early months of 2007.
Other economists, however, are not so sure.
www.factsonloans.com for latest money details and free newsletter
There is uncertainty over the course of U.S. economy and how fast it is slowing. Consumers at home, meanwhile, may already be buckling under the weight of their debts and may not easily be able to swallow higher borrowing costs.
The number of people declaring themselves insolvent hit a record in the third quarter.
"(5 percent) should be the peak," said Jonathan Loynes, chief European economist at Capital Economics. "We still expect the MPC to be back in loosening mode before the end of next year."
Thursday, August 03, 2006
interest rates up, read the facts 3 aug 2006
read the news on interest rates
from www.factsonloans.com
The Bank of England has raised interest rates to 4.75% from 4.5%. BBC News explains how this latest rate rise will affect your personal finances.
I'm a saver. Should I jump for joy?
It all depends on how much of the interest rate rise banks and building societies decide to pass on to savers.
In the past some banks and building societies have been accused of dragging their feet and not passing on the rate rise quickly enough.
In general, though, rate rises are good news for savers.
Pensioners and those buying an annuity - an income for life - may also be cheered. In the past they have had to make do with low rates of return.
But before savers start popping the champagne corks, they should remember that interest rates are still relatively low.
In addition, far too many investors keep their savings in accounts paying poor rates of interest, which actually lose them money once tax and inflation is factored in.
Financial experts are urging savers to be active and switch accounts to ensure they get the benefit of recent interest rate rises.
I have a big mortgage, is it time to hit the panic button?
The quarter percentage point rise alone is unlikely to push your finances over the edge.
Interest rates are still low by the standards of the past 20 years.
In addition, in recent years, more Britons have chosen mortgages where the interest rate is fixed for several years instead of variable rate deals, which are very susceptible to Bank of England base rates moves.
remember to tell your friends about the web site
www.factsonloans.com
As a result, the large numbers of people with a fixed-rate deal will be unaffected by the Bank's rate rise.
However, people with other types of mortgages - or whose fixed-rate period is coming to an end - are likely to face higher payments.
According to the Halifax, each quarter of a percentage point rise adds £15 to the monthly repayment on a £100,000 variable rate repayment mortgage - quite a substantial hit.
Is this the last rate rise? How much financial pain is in store for mortgage holders?
CONCERNED ABOUT DEBT?
National Debtline: A free, confidential and independent service funded by the Department of Trade and Industry and the credit industry. Tel: 0808 808 4000
Business Debtline: Provides a free telephone debt counselling service for self-employed and small businesses, partly funded by banks. Tel: 0800 197 6026
Consumer Credit Counselling Service: Funded entirely by the credit industry, the service offers advice to people in debt. Tel: 0800 138 1111
Citizens Advice: Offers free, independent and confidential advice from more than 700 locations throughout the UK. Tel: 0207 833 2181
Take our debt test
No one can say for certain whether or not there are further rate rises on the way.
However, many economists expect that UK rates are now on a upward path.
The Bank of England's main objective in raising rates is the control of inflation.
There is a pattern emerging in the world economy of rates rising as countries try to curtail inflation, which has been stoked in part by high oil and energy prices.
I have several credit cards - all near their spending limit. Will the rate rise hit me?
Credit card rates are often high but are less sensitive to Bank of England base rate movements than mortgages.
The rate rise may not feed through to credit card borrowers at all, particularly as the market place is competitive.
However, as interest rates rise, lenders tend to get twitchy about whether borrowers can afford to repay debts in the future.
In the early 1990s, the banks were accused of making an economic recession and a house price crash far worse by pulling the rug from under borrowers.
Many people found their credit card debt was called in at short notice and, as a result, got into financial hot water.
I have taken out a loan secured against my property, so am I going to regret it?
Many homeowners - seeing the value of their property rocket in recent years - have been tempted to remortgage to capitalise on rising house prices.
In addition, some people have consolidated debts such as credit cards and personal loans into a loan which is secured against their homes.
If they are unable to keep up payments they could risk losing their homes.
Any interest rate rise will hit homeowners who have remortgaged with a double whammy - first on their main mortgage, then again on the second one.
What can I do to protect myself?
First, don't panic.
No major UK economists are predicting that a recession is around the corner.
In addition, even with the quarter point rise, interest rates are roughly half the average of the past 20 years.
But some debt experts hope that the interest rate rise will act as a wake-up call to UK borrowers to get their finances under control.
join our newsletter at www.factsonloans.com
from www.factsonloans.com
The Bank of England has raised interest rates to 4.75% from 4.5%. BBC News explains how this latest rate rise will affect your personal finances.
I'm a saver. Should I jump for joy?
It all depends on how much of the interest rate rise banks and building societies decide to pass on to savers.
In the past some banks and building societies have been accused of dragging their feet and not passing on the rate rise quickly enough.
In general, though, rate rises are good news for savers.
Pensioners and those buying an annuity - an income for life - may also be cheered. In the past they have had to make do with low rates of return.
But before savers start popping the champagne corks, they should remember that interest rates are still relatively low.
In addition, far too many investors keep their savings in accounts paying poor rates of interest, which actually lose them money once tax and inflation is factored in.
Financial experts are urging savers to be active and switch accounts to ensure they get the benefit of recent interest rate rises.
I have a big mortgage, is it time to hit the panic button?
The quarter percentage point rise alone is unlikely to push your finances over the edge.
Interest rates are still low by the standards of the past 20 years.
In addition, in recent years, more Britons have chosen mortgages where the interest rate is fixed for several years instead of variable rate deals, which are very susceptible to Bank of England base rates moves.
remember to tell your friends about the web site
www.factsonloans.com
As a result, the large numbers of people with a fixed-rate deal will be unaffected by the Bank's rate rise.
However, people with other types of mortgages - or whose fixed-rate period is coming to an end - are likely to face higher payments.
According to the Halifax, each quarter of a percentage point rise adds £15 to the monthly repayment on a £100,000 variable rate repayment mortgage - quite a substantial hit.
Is this the last rate rise? How much financial pain is in store for mortgage holders?
CONCERNED ABOUT DEBT?
National Debtline: A free, confidential and independent service funded by the Department of Trade and Industry and the credit industry. Tel: 0808 808 4000
Business Debtline: Provides a free telephone debt counselling service for self-employed and small businesses, partly funded by banks. Tel: 0800 197 6026
Consumer Credit Counselling Service: Funded entirely by the credit industry, the service offers advice to people in debt. Tel: 0800 138 1111
Citizens Advice: Offers free, independent and confidential advice from more than 700 locations throughout the UK. Tel: 0207 833 2181
Take our debt test
No one can say for certain whether or not there are further rate rises on the way.
However, many economists expect that UK rates are now on a upward path.
The Bank of England's main objective in raising rates is the control of inflation.
There is a pattern emerging in the world economy of rates rising as countries try to curtail inflation, which has been stoked in part by high oil and energy prices.
I have several credit cards - all near their spending limit. Will the rate rise hit me?
Credit card rates are often high but are less sensitive to Bank of England base rate movements than mortgages.
The rate rise may not feed through to credit card borrowers at all, particularly as the market place is competitive.
However, as interest rates rise, lenders tend to get twitchy about whether borrowers can afford to repay debts in the future.
In the early 1990s, the banks were accused of making an economic recession and a house price crash far worse by pulling the rug from under borrowers.
Many people found their credit card debt was called in at short notice and, as a result, got into financial hot water.
I have taken out a loan secured against my property, so am I going to regret it?
Many homeowners - seeing the value of their property rocket in recent years - have been tempted to remortgage to capitalise on rising house prices.
In addition, some people have consolidated debts such as credit cards and personal loans into a loan which is secured against their homes.
If they are unable to keep up payments they could risk losing their homes.
Any interest rate rise will hit homeowners who have remortgaged with a double whammy - first on their main mortgage, then again on the second one.
What can I do to protect myself?
First, don't panic.
No major UK economists are predicting that a recession is around the corner.
In addition, even with the quarter point rise, interest rates are roughly half the average of the past 20 years.
But some debt experts hope that the interest rate rise will act as a wake-up call to UK borrowers to get their finances under control.
join our newsletter at www.factsonloans.com
Wednesday, August 02, 2006
watch you don,t miss a loan payent
loans and mortgages , its important, you make payments on time.
here at www.factsonloans.com we help you keep your payments on track
Sub-prime mortgages are sold to people with a poor credit rating - and as lenders get more cautious, an increasing number of people will be forced to resort to them. Samantha Downes did so - and is paying the price
Millions of Britons are being left with little choice but to take out expensive and complicated home loans known as sub-prime mortgages.
Samantha Downes: was forced to take out a sub-prime home loan after missing a loan repayment
These loans, also called credit repair mortgages, are sold to people who have a poor credit record and charge a higher rate of interest because the borrower is considered a more risky bet.
With lenders tightening up their credit policies, simply missing a loan repayment may mean that a borrower is forced to take out a sub-prime mortgage. People who are divorced are often also left with no option but to opt for a sub-prime loan.
The latest figures from Datamonitor estimate that 9.1m people were refused credit by mainstream lenders in 2005 and have been forced to look elsewhere. But Moneyfacts, the comparison service, says it is a minefield for people ineligible for standard mortgages - there are more than 4,000 different sub-prime mortgage products and a variety of fixed, variable and discounted rates are available.
"These mortgages are complex and fees tend be higher, while loan-to-values [LTVs] are lower and interest rates are generally higher than those in the mainstream mortgage market," says Julia Harris, a mortgage analyst at Moneyfacts. "The products are not that difficult to understand, but knowing how to find the most suitable product can be a real challenge."
There are different levels of sub-prime mortgage. Someone who has a very bad credit rating - they may be a discharged bankrupt or have a lot of county court judgements against them - will be sold a "heavier" version.
Someone who has missed a couple of mortgage or loan payments in the past will often be sold a "near-prime" or "light" version of the mortgage.
Sub-prime mortgages can charge as much as three percentage points more than an average standard variable rate mortgage - but again it will depend on your credit rating. According to Moneyfacts, there are huge differences between sub-prime and near-prime, with Amber Home Loans charging 5.15 per cent for a two-year fixed rate for a near-prime, while Freedom Lending charges 6.73 per cent and Birmingham Midshires 7 per cent for their sub-prime loans.
The heavier the mortgage, the bigger the fee. Search on Google and you can see that some sub-prime advisers charge 2 per cent to 2.5 per cent of the loan. That could easily work out at a £3,000 - a sum that someone with debts may not be able to pay.
Experts recommend that rather than looking for the "best rate", it is important to determine first how impaired your credit rating is - whether you will qualify for a near-prime loan or face a fully fledged sub-prime mortgage. So when beginning your mortgage search, your usual searching criteria are reversed. First you need to find lender(s) that will accept your particular financial position; then you can start to look for the best deal.
let your friends about our site www.factsonloans.com
If you have a CCJ or arrears do not automatically assume you cannot get a mainstream mortgage, as some lenders will accept some "minor debt". For example, The One account will look at cases where borrowers have a CCJ of up to £1,000 and Manchester Building Society will accept two CCJs in the past year of up to £1,000 and one payment in arrears in the past year on their whole range of home loans.
Sub-prime mortgages are not to be confused with self-certification mortgages, which are aimed at the self-employed.
Self-cert mortgages, introduced around 15 years ago, have eased the burden of proof - to qualify for a home loan borrowers just need to sign a statement of earnings, not provide actual proof. The difference between traditional mortgages and self-certs is narrower than it has ever been. However, there can be some catches.
For instance, first-time buyers and new business owners may be turned away. Unless a self-employed person has been trading for at least one, usually two, years, they generally cannot just sign a statement of earnings. Typically, an accountant must confirm the turnover, profit and salary. In addition, two years' full accounts plus two years' full tax liability may be requested.
There is also a credit check, on which first-time buyers may score too low to qualify. Ironically, buyers with no credit cards stand less chance than someone with several cards because they do not have a history of being able to repay debt.
The majority of self-certified mortgage lenders demand a 25 per cent deposit; a small minority will accept a 15 per cent deposit, and an even smaller minority 10 per cent.
free newsletter for at www.factsonloans.com
here at www.factsonloans.com we help you keep your payments on track
Sub-prime mortgages are sold to people with a poor credit rating - and as lenders get more cautious, an increasing number of people will be forced to resort to them. Samantha Downes did so - and is paying the price
Millions of Britons are being left with little choice but to take out expensive and complicated home loans known as sub-prime mortgages.
Samantha Downes: was forced to take out a sub-prime home loan after missing a loan repayment
These loans, also called credit repair mortgages, are sold to people who have a poor credit record and charge a higher rate of interest because the borrower is considered a more risky bet.
With lenders tightening up their credit policies, simply missing a loan repayment may mean that a borrower is forced to take out a sub-prime mortgage. People who are divorced are often also left with no option but to opt for a sub-prime loan.
The latest figures from Datamonitor estimate that 9.1m people were refused credit by mainstream lenders in 2005 and have been forced to look elsewhere. But Moneyfacts, the comparison service, says it is a minefield for people ineligible for standard mortgages - there are more than 4,000 different sub-prime mortgage products and a variety of fixed, variable and discounted rates are available.
"These mortgages are complex and fees tend be higher, while loan-to-values [LTVs] are lower and interest rates are generally higher than those in the mainstream mortgage market," says Julia Harris, a mortgage analyst at Moneyfacts. "The products are not that difficult to understand, but knowing how to find the most suitable product can be a real challenge."
There are different levels of sub-prime mortgage. Someone who has a very bad credit rating - they may be a discharged bankrupt or have a lot of county court judgements against them - will be sold a "heavier" version.
Someone who has missed a couple of mortgage or loan payments in the past will often be sold a "near-prime" or "light" version of the mortgage.
Sub-prime mortgages can charge as much as three percentage points more than an average standard variable rate mortgage - but again it will depend on your credit rating. According to Moneyfacts, there are huge differences between sub-prime and near-prime, with Amber Home Loans charging 5.15 per cent for a two-year fixed rate for a near-prime, while Freedom Lending charges 6.73 per cent and Birmingham Midshires 7 per cent for their sub-prime loans.
The heavier the mortgage, the bigger the fee. Search on Google and you can see that some sub-prime advisers charge 2 per cent to 2.5 per cent of the loan. That could easily work out at a £3,000 - a sum that someone with debts may not be able to pay.
Experts recommend that rather than looking for the "best rate", it is important to determine first how impaired your credit rating is - whether you will qualify for a near-prime loan or face a fully fledged sub-prime mortgage. So when beginning your mortgage search, your usual searching criteria are reversed. First you need to find lender(s) that will accept your particular financial position; then you can start to look for the best deal.
let your friends about our site www.factsonloans.com
If you have a CCJ or arrears do not automatically assume you cannot get a mainstream mortgage, as some lenders will accept some "minor debt". For example, The One account will look at cases where borrowers have a CCJ of up to £1,000 and Manchester Building Society will accept two CCJs in the past year of up to £1,000 and one payment in arrears in the past year on their whole range of home loans.
Sub-prime mortgages are not to be confused with self-certification mortgages, which are aimed at the self-employed.
Self-cert mortgages, introduced around 15 years ago, have eased the burden of proof - to qualify for a home loan borrowers just need to sign a statement of earnings, not provide actual proof. The difference between traditional mortgages and self-certs is narrower than it has ever been. However, there can be some catches.
For instance, first-time buyers and new business owners may be turned away. Unless a self-employed person has been trading for at least one, usually two, years, they generally cannot just sign a statement of earnings. Typically, an accountant must confirm the turnover, profit and salary. In addition, two years' full accounts plus two years' full tax liability may be requested.
There is also a credit check, on which first-time buyers may score too low to qualify. Ironically, buyers with no credit cards stand less chance than someone with several cards because they do not have a history of being able to repay debt.
The majority of self-certified mortgage lenders demand a 25 per cent deposit; a small minority will accept a 15 per cent deposit, and an even smaller minority 10 per cent.
free newsletter for at www.factsonloans.com
Wednesday, July 26, 2006
interest rate to effect your loans www.factsonloans.com
which way will loans go after the world cup
Funny old things interest rates. Whether they rise, fall or stay put they remain a topic of conversation up and down the country. Actually, when they do remain unchanged, as they have for the last 11 months, amateur speculation increases and myths arise.
I have heard theories that just about everything from John Prescott's sex life (bleugh) to the hosepipe ban (not a euphemism for Prescott's sex life) is set to influence the cost of our mortgages and the value of our savings account payouts.The seven men and women who currently set base rate - the Bank of England's Monetary Policy Committee (MPC) - are never likely to please all of the people all of the time. And they consider a wide range of economic factors and indicators when making their minds up. The minutes of their July meeting reveal that they left rates unchanged at 4.5% because a weaker jobs market would help ease pricing pressure. Look ahead and analysts' opinions divide. According to economic forecast group the Ernst & Young Item Club, the MPC has enough room to manoeuvre to allow interest rates to stay at 4.5%.
tell your friends to join our e mail loop www.factsonloans.com
It expects rising oil and commodity prices will slow growth, allowing the Bank enough slack in the economy to leave rates on hold. Then consumers and the government will also put the brakes on growth as they cut back after years of heavy spending. Despite pressure from rising oil prices, Ernst & Young said inflation was likely to fall below 2% in the middle of next year and hit an average of 1.8% in 2008. Should they stay or should they grow? 'With the economy showing signs of rebalancing away from the consumer and towards investment and trade, the economy is moving in exactly the direction the Bank would want,' says Steve Radley, chief economist at the Engineering Employers Federation (EEF). 'For the time being, there is no need to risk rocking the boat with a move in either direction.' The CBI director-general Richard Lambert is himself a former member of the MPC and is a former editor of the Financial Times. He has urged the Bank of England to leave interest rates on hold next month, adding 'It's possible that, if inflationary pressures rise, then a modest increase in rates might be necessary, but not until later in the year.' After a relatively brisk summer, retailers are now braced for a disappointing autumn, the CBI reports. Mr Lambert believes the so-called World Cup effect would be 'short-term and relatively temporary'', since much of it represented spending which would otherwise have taken place later in the year. Consumers are also under pressure from high household bills and rising fuel costs. Mr Lambert said he thought the boom enjoyed in economies around the world was drawing to a close: 'This year will mark some kind of peak in the global economic upswing, and 2007 is likely to be tougher,' he warned.But others expect rates to move soon - perhaps as early as next month - to keep inflation in check. It rose from 2.2% in May to 2.5% in June, overtaking the Bank's 2% target, due in part to soaring energy costs.
If it fails to drop or suffers any more fast increases, the heat will surely be around the corner for the MPC. James Knightley, economist at ING suspects the MPC will raise rates in November: 'We look for rates to peak at 4.75%, while the markets see the risk of them going to 5.25% next year,' he says. Finally, if in doubt, cover your bets. Trevor Williams, chief economist at Lloyds TSB Financial Markets says: 'The direction rates could take is becoming much less obvious. The chances are, rates will be held for a few more months, although if growth continues to out-pace the long run average, and inflation stays above target, we could see a rise come the autumn.' So rates could stay the same. Or, er, rise.Avoid base rate rises Of course the base rate - which forms the starting point for the rate of interest you are charged by your mortgage lender - is still, historically speaking, very low. Plenty of homeowners remember the painful days when rates hit 15% or more.So what can borrowers do to beat the base rate? For starters, if you are lazy enough to pay your lender's standard variable rate (or SVR) - which is usually the most expensive and has absolutely no frills - then you are throwing your cash away every month. But amazingly, one out of every two homeowners surveyed by Bradford & Bingley said they would not consider remortgaging unless interest rates increase by a full 1% or more. Almost two thirds said they would not be concerned about increases to their mortgage repayments until they had risen by more than £50 per month. And a very relaxed 35% of those asked said it would take an increase of more than £100 per month to spur them into action. Many mortgage lenders are on the case with new products designed to help you avoid paying more than you have to. Ray Boulger, senior technical manager at John Charcol, comments: 'In the current market there is considerable uncertainty as to where rates are headed over the next year, but current fixed rates are factoring in a half a per cent rise in Bank Base Rate which may well not happen. We have therefore specifically put together this mortgage as a superb solution for those who think fixed rates are expensive but like the idea of a fix when they feel the price is right. Put simply, it allows borrowers to take advantage of a low tracker rate whilst retaining the ability to move onto any fixed rate, until 31st January 2012, for any reason. A unique feature of this droplock option is that borrowers will not be charged a new arrangement fee if they exercise their right to switch.'
tell your friends about our website
www.factsonloans.com free e newsletter
Funny old things interest rates. Whether they rise, fall or stay put they remain a topic of conversation up and down the country. Actually, when they do remain unchanged, as they have for the last 11 months, amateur speculation increases and myths arise.
I have heard theories that just about everything from John Prescott's sex life (bleugh) to the hosepipe ban (not a euphemism for Prescott's sex life) is set to influence the cost of our mortgages and the value of our savings account payouts.The seven men and women who currently set base rate - the Bank of England's Monetary Policy Committee (MPC) - are never likely to please all of the people all of the time. And they consider a wide range of economic factors and indicators when making their minds up. The minutes of their July meeting reveal that they left rates unchanged at 4.5% because a weaker jobs market would help ease pricing pressure. Look ahead and analysts' opinions divide. According to economic forecast group the Ernst & Young Item Club, the MPC has enough room to manoeuvre to allow interest rates to stay at 4.5%.
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It expects rising oil and commodity prices will slow growth, allowing the Bank enough slack in the economy to leave rates on hold. Then consumers and the government will also put the brakes on growth as they cut back after years of heavy spending. Despite pressure from rising oil prices, Ernst & Young said inflation was likely to fall below 2% in the middle of next year and hit an average of 1.8% in 2008. Should they stay or should they grow? 'With the economy showing signs of rebalancing away from the consumer and towards investment and trade, the economy is moving in exactly the direction the Bank would want,' says Steve Radley, chief economist at the Engineering Employers Federation (EEF). 'For the time being, there is no need to risk rocking the boat with a move in either direction.' The CBI director-general Richard Lambert is himself a former member of the MPC and is a former editor of the Financial Times. He has urged the Bank of England to leave interest rates on hold next month, adding 'It's possible that, if inflationary pressures rise, then a modest increase in rates might be necessary, but not until later in the year.' After a relatively brisk summer, retailers are now braced for a disappointing autumn, the CBI reports. Mr Lambert believes the so-called World Cup effect would be 'short-term and relatively temporary'', since much of it represented spending which would otherwise have taken place later in the year. Consumers are also under pressure from high household bills and rising fuel costs. Mr Lambert said he thought the boom enjoyed in economies around the world was drawing to a close: 'This year will mark some kind of peak in the global economic upswing, and 2007 is likely to be tougher,' he warned.But others expect rates to move soon - perhaps as early as next month - to keep inflation in check. It rose from 2.2% in May to 2.5% in June, overtaking the Bank's 2% target, due in part to soaring energy costs.
If it fails to drop or suffers any more fast increases, the heat will surely be around the corner for the MPC. James Knightley, economist at ING suspects the MPC will raise rates in November: 'We look for rates to peak at 4.75%, while the markets see the risk of them going to 5.25% next year,' he says. Finally, if in doubt, cover your bets. Trevor Williams, chief economist at Lloyds TSB Financial Markets says: 'The direction rates could take is becoming much less obvious. The chances are, rates will be held for a few more months, although if growth continues to out-pace the long run average, and inflation stays above target, we could see a rise come the autumn.' So rates could stay the same. Or, er, rise.Avoid base rate rises Of course the base rate - which forms the starting point for the rate of interest you are charged by your mortgage lender - is still, historically speaking, very low. Plenty of homeowners remember the painful days when rates hit 15% or more.So what can borrowers do to beat the base rate? For starters, if you are lazy enough to pay your lender's standard variable rate (or SVR) - which is usually the most expensive and has absolutely no frills - then you are throwing your cash away every month. But amazingly, one out of every two homeowners surveyed by Bradford & Bingley said they would not consider remortgaging unless interest rates increase by a full 1% or more. Almost two thirds said they would not be concerned about increases to their mortgage repayments until they had risen by more than £50 per month. And a very relaxed 35% of those asked said it would take an increase of more than £100 per month to spur them into action. Many mortgage lenders are on the case with new products designed to help you avoid paying more than you have to. Ray Boulger, senior technical manager at John Charcol, comments: 'In the current market there is considerable uncertainty as to where rates are headed over the next year, but current fixed rates are factoring in a half a per cent rise in Bank Base Rate which may well not happen. We have therefore specifically put together this mortgage as a superb solution for those who think fixed rates are expensive but like the idea of a fix when they feel the price is right. Put simply, it allows borrowers to take advantage of a low tracker rate whilst retaining the ability to move onto any fixed rate, until 31st January 2012, for any reason. A unique feature of this droplock option is that borrowers will not be charged a new arrangement fee if they exercise their right to switch.'
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Tuesday, May 09, 2006
pound rise against dollar, what will interest rates do 9th may 06
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- How come the pound keeps rising? "Sterling hit a two-month high versus the euro [this morning]," says Reuters.- And the newswire provides an answer, too - thanking "strong retail sales and house price data [that] supported expectations that the Bank of England will not cut interest rates and may even tighten by year-end."- In other words, who cares that in the first three months of this year an all-time high of 23,351 people sought individual insolvency through the courts, a 73.4% increase on the corresponding period last year and 12.9% higher than the previous quarter? Lumpus britannicus hit the shops hard in April.
Fill your boots with sterling quick - before the Old Ladies raise base rates and pull the worsted-wool rug out from under us all.- Like-for-like retail sales grew 6.8% last month, said the British Retail Consortium this morning. Time was, that would have seemed wild and excessive - stupid even, like a 4x4 jeep stuck in traffic on Kew Bridge. But "traders will not be getting carried away with these results," says Helen Dickinson, head of retail at consulting firm KPMG. Near 7% extra spending in one month is nothing to get worked up about anymore. - Of course, only one kind of cashpoint can spit out money fast enough to keep pace. And the average house-price in England & Wales rose 5.05% between January and March, says the Land Registry, up to £192,745. Sales volumes rose 37% from a year ago.- Here in boomtown, London house prices rose 6.29% in the period.
The average London home now costs £306,661. Transaction volumes were up nearly 41%. Ergo, the thinking goes, base rates will rise to head off a bubble in house prices - and that makes sterling attractive to investors searching for yield.- "The recent strength of sterling," muses Tom Tragett, your editor's expert currency contact, in a note. "It seems most unusual - leaving aside the M&A flows - especially given the extremely poor political domestic backdrop and our pretty innocuous economy. But it all makes sense if you figure that central banks are conducting 'reserve adjustments'...getting out of US dollars...and that some - mostly Middle Eastern banks - clearly favour the Betty Grable."- The Betty Grable? Cable is the name forex traders give to buying sterling when selling dollars. Geddit? But still this doesn't explain the almost phenomenal strength of the proud pound in your pocket.
Sterling has risen from $1.73 to $1.86 in the past month alone. How come? - "Greenspan's famous conundrum has all but gone," Tom notes. "Thirty-year US bond yields have surged as the price of the bond itself has dumped from 97.25 at the mid/end March to 89.50 at the close last week.
This fall in the 30-year bond price as coincided with the rise in sterling over the same period. So someone's exiting US Treasuries and piling into pounds. I reckon it's the Japanese..."- Regular readers will recall that the Bank of Japan has an open position of some several hundred billion dollars, bought when it wanted to depress the Yen and stoke Japan's runt of an export-led recovery in 2003/4. But they might not know what next-door's 'For Sale' has got to do with Japan's post office savings accounts.- "Naturally, Japan's intervention to buy dollars was stuck into US Treasurys," says Tom. "Even when yields dipped below 4%, they still paid a whole heap more than Japan's own zero-rate bank deposits. Now of course, with the Japanese economy on the up-tick, they might have decided it's time to lighten up on their dollar holdings.
The world and his dog know the greenback is due another tumble. Why play sucker and keep hanging on?"- Tom Tragett: "But the Japanese are the biggest holders of US Treasury debt in the world. So they could never be seen selling dollars and buying yen in the open market. It would be like screaming fire in a crowded pub.
The dollar/yen would collapse into free fall. And this makes their position unmanageable..."- So the only way for them to remove the risk of a dollar fall versus yen, says Tom, is to switch the position slowly into another currency. "For example, they would sell their Treasuries - and then sell the subsequent dollar receipts for, say, sterling, for want of a better protagonist.
In order for this not to show up immediately in their official reserve figures they could use Kampo - the Japanese Post Office's life insurance pot - to buy the sterling discretely in the market over a period of several weeks/months."- Take heed, warns Tom. "I am not saying that the BOJ is buying sterling - and I'm certainly not advising anyone goes long GBP/JPY just yet. But clearly someone very big is getting into the pound...and it could be that the Chinese, US, UK and Japanese have done a deal to get Tokyo out of jail when the Chinese Yuan does finally float and sink the dollar."
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- How come the pound keeps rising? "Sterling hit a two-month high versus the euro [this morning]," says Reuters.- And the newswire provides an answer, too - thanking "strong retail sales and house price data [that] supported expectations that the Bank of England will not cut interest rates and may even tighten by year-end."- In other words, who cares that in the first three months of this year an all-time high of 23,351 people sought individual insolvency through the courts, a 73.4% increase on the corresponding period last year and 12.9% higher than the previous quarter? Lumpus britannicus hit the shops hard in April.
Fill your boots with sterling quick - before the Old Ladies raise base rates and pull the worsted-wool rug out from under us all.- Like-for-like retail sales grew 6.8% last month, said the British Retail Consortium this morning. Time was, that would have seemed wild and excessive - stupid even, like a 4x4 jeep stuck in traffic on Kew Bridge. But "traders will not be getting carried away with these results," says Helen Dickinson, head of retail at consulting firm KPMG. Near 7% extra spending in one month is nothing to get worked up about anymore. - Of course, only one kind of cashpoint can spit out money fast enough to keep pace. And the average house-price in England & Wales rose 5.05% between January and March, says the Land Registry, up to £192,745. Sales volumes rose 37% from a year ago.- Here in boomtown, London house prices rose 6.29% in the period.
The average London home now costs £306,661. Transaction volumes were up nearly 41%. Ergo, the thinking goes, base rates will rise to head off a bubble in house prices - and that makes sterling attractive to investors searching for yield.- "The recent strength of sterling," muses Tom Tragett, your editor's expert currency contact, in a note. "It seems most unusual - leaving aside the M&A flows - especially given the extremely poor political domestic backdrop and our pretty innocuous economy. But it all makes sense if you figure that central banks are conducting 'reserve adjustments'...getting out of US dollars...and that some - mostly Middle Eastern banks - clearly favour the Betty Grable."- The Betty Grable? Cable is the name forex traders give to buying sterling when selling dollars. Geddit? But still this doesn't explain the almost phenomenal strength of the proud pound in your pocket.
Sterling has risen from $1.73 to $1.86 in the past month alone. How come? - "Greenspan's famous conundrum has all but gone," Tom notes. "Thirty-year US bond yields have surged as the price of the bond itself has dumped from 97.25 at the mid/end March to 89.50 at the close last week.
This fall in the 30-year bond price as coincided with the rise in sterling over the same period. So someone's exiting US Treasuries and piling into pounds. I reckon it's the Japanese..."- Regular readers will recall that the Bank of Japan has an open position of some several hundred billion dollars, bought when it wanted to depress the Yen and stoke Japan's runt of an export-led recovery in 2003/4. But they might not know what next-door's 'For Sale' has got to do with Japan's post office savings accounts.- "Naturally, Japan's intervention to buy dollars was stuck into US Treasurys," says Tom. "Even when yields dipped below 4%, they still paid a whole heap more than Japan's own zero-rate bank deposits. Now of course, with the Japanese economy on the up-tick, they might have decided it's time to lighten up on their dollar holdings.
The world and his dog know the greenback is due another tumble. Why play sucker and keep hanging on?"- Tom Tragett: "But the Japanese are the biggest holders of US Treasury debt in the world. So they could never be seen selling dollars and buying yen in the open market. It would be like screaming fire in a crowded pub.
The dollar/yen would collapse into free fall. And this makes their position unmanageable..."- So the only way for them to remove the risk of a dollar fall versus yen, says Tom, is to switch the position slowly into another currency. "For example, they would sell their Treasuries - and then sell the subsequent dollar receipts for, say, sterling, for want of a better protagonist.
In order for this not to show up immediately in their official reserve figures they could use Kampo - the Japanese Post Office's life insurance pot - to buy the sterling discretely in the market over a period of several weeks/months."- Take heed, warns Tom. "I am not saying that the BOJ is buying sterling - and I'm certainly not advising anyone goes long GBP/JPY just yet. But clearly someone very big is getting into the pound...and it could be that the Chinese, US, UK and Japanese have done a deal to get Tokyo out of jail when the Chinese Yuan does finally float and sink the dollar."
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how will usa effect interest rates and loans 9th of may 06
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Bill Bonner, from the southern shores of the Thames:"More Americans join pool of 'near poor'," runs a headline in today's International Herald Tribune.Over the weekend, Warren Buffet provided the evidence. He said that when he looked through the financial statements of lending companies he noticed that the entry for 'interest accrued but not paid' was rising.
What this means, he explained, was that people were having a hard time servicing their debt. And worse yet, the real estate casino on which they were depending is cooling off. Toll Brothers, one of the nation's largest homebuilders, says new orders fell 33% so far in the 2nd quarter.And so we return to a familiar theme, but one not quite exhausted: savings are available to serve you, debt is always your master."The debtor is slave to the lender," says the Bible.Dear readers may wonder whom we are arguing with, or what question we are answering.
It is an obvious one; you may want to neither borrower nor lender be but if you have to make a choice, it is better to be owed than to owe.That is the big difference between a trade deficit and a trade surplus. In the former, you gradually become a slave to your trading partners. The larger the deficits, the more you tend to owe them. In the latter, they gradually become slaves to you. That is what is happening with the Chinese and Japanese.
They have now become creditors of the US; they can enjoy income from their US paper while America struggles to keep up with the debt.But who will turn out to be the greater fool, the one who buys what he can't afford or the one who lends what won't be repaid?Americans, consciously or unconsciously, are betting on inflation.
They are hoping their favourite swindlers at the central bank will continue to engineer a gradual devaluation of the dollar so as to ruin their creditors rather than themselves. The dollar lost half its value during the Greenspan years alone. And now the Bush administration is adding more debt than all the other administrations in US history combined. Inflation looks like a sure bet, a 'done deal.'Commodities are rising.
Health care, education, housing, energy - everything measured in dollars that the Asians can't produce and supermarkets can't put on its shelves, is soaring. And gold is rocketing and outperforming stocks, commodities, bonds, the euro, housing - everything.How nice it would be if the empire's creditors would go gently into that good night! They must read the papers. They must see the dollar going down and gold going up.
Imagine yourself in the same situation; wouldn't you be tempted to shuck some of that green paper in favour of the yellow metal? Wouldn't you want to protect yourself?But, according to lumpen-American economic theory, the creditors just stand there, stock still, while the big inflation bus runs over them. Not only do they not sell their US bonds and dump their US dollars - they continue adding to their inventory, like collectors of Cabbage Patch dolls long after the fad has moved on.God bless 'em.
But we doubt the lenders are quite as dumb as the borrowers believe. In fact, there could come a time - any minute, in fact - when the lenders wise up. The dollar could end its gentle decline and drop like a stone. Then, the lending would cease too, the US economy would come to a halt and all those people who are finding it difficult to keep up with their payments would suddenly find it impossible. The defaults and bankruptcies would multiply. American debt may be wiped out by inflation, but Americans will probably be wiped out first.
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Bill Bonner, from the southern shores of the Thames:"More Americans join pool of 'near poor'," runs a headline in today's International Herald Tribune.Over the weekend, Warren Buffet provided the evidence. He said that when he looked through the financial statements of lending companies he noticed that the entry for 'interest accrued but not paid' was rising.
What this means, he explained, was that people were having a hard time servicing their debt. And worse yet, the real estate casino on which they were depending is cooling off. Toll Brothers, one of the nation's largest homebuilders, says new orders fell 33% so far in the 2nd quarter.And so we return to a familiar theme, but one not quite exhausted: savings are available to serve you, debt is always your master."The debtor is slave to the lender," says the Bible.Dear readers may wonder whom we are arguing with, or what question we are answering.
It is an obvious one; you may want to neither borrower nor lender be but if you have to make a choice, it is better to be owed than to owe.That is the big difference between a trade deficit and a trade surplus. In the former, you gradually become a slave to your trading partners. The larger the deficits, the more you tend to owe them. In the latter, they gradually become slaves to you. That is what is happening with the Chinese and Japanese.
They have now become creditors of the US; they can enjoy income from their US paper while America struggles to keep up with the debt.But who will turn out to be the greater fool, the one who buys what he can't afford or the one who lends what won't be repaid?Americans, consciously or unconsciously, are betting on inflation.
They are hoping their favourite swindlers at the central bank will continue to engineer a gradual devaluation of the dollar so as to ruin their creditors rather than themselves. The dollar lost half its value during the Greenspan years alone. And now the Bush administration is adding more debt than all the other administrations in US history combined. Inflation looks like a sure bet, a 'done deal.'Commodities are rising.
Health care, education, housing, energy - everything measured in dollars that the Asians can't produce and supermarkets can't put on its shelves, is soaring. And gold is rocketing and outperforming stocks, commodities, bonds, the euro, housing - everything.How nice it would be if the empire's creditors would go gently into that good night! They must read the papers. They must see the dollar going down and gold going up.
Imagine yourself in the same situation; wouldn't you be tempted to shuck some of that green paper in favour of the yellow metal? Wouldn't you want to protect yourself?But, according to lumpen-American economic theory, the creditors just stand there, stock still, while the big inflation bus runs over them. Not only do they not sell their US bonds and dump their US dollars - they continue adding to their inventory, like collectors of Cabbage Patch dolls long after the fad has moved on.God bless 'em.
But we doubt the lenders are quite as dumb as the borrowers believe. In fact, there could come a time - any minute, in fact - when the lenders wise up. The dollar could end its gentle decline and drop like a stone. Then, the lending would cease too, the US economy would come to a halt and all those people who are finding it difficult to keep up with their payments would suddenly find it impossible. The defaults and bankruptcies would multiply. American debt may be wiped out by inflation, but Americans will probably be wiped out first.
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uk interest rates looking to rise
here at www.factsonloans.com we give a free view on uk interest rates, saving rates
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The pound has risen sharply against the dollar in recent weeks. The latest data on inflation supported gains, as it became even more likely that UK interest rates will rise this year.
Data on producer prices showed that manufacturers are still coming under pressure from sharp rises in energy and materials costs. But the numbers for February suggests they are increasingly having more success at raising the prices they charge their customers.
Raw materials bills rose at the fastest pace in nine months during April, up 15.7% on the same time last year. But prices charged were also higher, up 2.4% on the same time last year. It’s the fourth month in a row that output prices have gone up.
Money markets are now pricing in another quarter point hike in UK interest rates before the end of the year. Alan Clarke at BNP Paribas expects the Bank of England “to signal that it is moving towards a hike in this week’s Inflation Report,” which is due out tomorrow.
Growing expectations of further rate hikes have pushed the pound to its highest levels in nearly a year against the dollar. The pound now buys more than $1.85, compared to less than $1.75 just a month ago.
But this isn’t just about the pound. The dollar is falling against all the major currencies. A single dollar is now worth less than 112 yen, compared to more than 117 yen last month, and it has fallen 4% against the euro in the same time period. And of course, gold – the ultimate reserve currency – has been hitting fresh 25-year highs on an almost daily basis since the start of the year.
Federal Reserve chief Ben Bernanke sparked the latest dive in the dollar by giving the market the impression that the next US interest rate rise, due on Wednesday, is likely to be the last for a while. A weak report on new jobs for April compounded this view, sending stocks soaring, but driving the dollar down.
But even if the Fed hasn’t finished with rate hikes, it’s going to be tougher to support the currency simply by raising interest rates.
When interest rates are low and stable across the world, currency traders can make apparently easy money by borrowing in low interest-rate currencies and investing in high-rate ones.
But when interest rates start to rise in tandem across the world, this“carry trade” becomes much more dangerous. The exchange rate can suddenly move against unwary investors as markets start to focus more on economic fundamentals – like trade deficits – and less on interest rate differentials
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www.factsonloans.com
read this information
The pound has risen sharply against the dollar in recent weeks. The latest data on inflation supported gains, as it became even more likely that UK interest rates will rise this year.
Data on producer prices showed that manufacturers are still coming under pressure from sharp rises in energy and materials costs. But the numbers for February suggests they are increasingly having more success at raising the prices they charge their customers.
Raw materials bills rose at the fastest pace in nine months during April, up 15.7% on the same time last year. But prices charged were also higher, up 2.4% on the same time last year. It’s the fourth month in a row that output prices have gone up.
Money markets are now pricing in another quarter point hike in UK interest rates before the end of the year. Alan Clarke at BNP Paribas expects the Bank of England “to signal that it is moving towards a hike in this week’s Inflation Report,” which is due out tomorrow.
Growing expectations of further rate hikes have pushed the pound to its highest levels in nearly a year against the dollar. The pound now buys more than $1.85, compared to less than $1.75 just a month ago.
But this isn’t just about the pound. The dollar is falling against all the major currencies. A single dollar is now worth less than 112 yen, compared to more than 117 yen last month, and it has fallen 4% against the euro in the same time period. And of course, gold – the ultimate reserve currency – has been hitting fresh 25-year highs on an almost daily basis since the start of the year.
Federal Reserve chief Ben Bernanke sparked the latest dive in the dollar by giving the market the impression that the next US interest rate rise, due on Wednesday, is likely to be the last for a while. A weak report on new jobs for April compounded this view, sending stocks soaring, but driving the dollar down.
But even if the Fed hasn’t finished with rate hikes, it’s going to be tougher to support the currency simply by raising interest rates.
When interest rates are low and stable across the world, currency traders can make apparently easy money by borrowing in low interest-rate currencies and investing in high-rate ones.
But when interest rates start to rise in tandem across the world, this“carry trade” becomes much more dangerous. The exchange rate can suddenly move against unwary investors as markets start to focus more on economic fundamentals – like trade deficits – and less on interest rate differentials
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Thursday, May 04, 2006
loan interest goes up down under, will uk be next
loan interest rate are going up in aussie will the uk follow
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Australia ’s central bank has hiked the country’s key interest rate to 5.75%. The move was the first change in 14 months, and left the rate at its highest since February 2001.
The move took analysts by surprise. Shane Oliver at Sydney-based AMP Capital Markets described the move as “a knock on the head” for retail sales and the housing market, which have been steadily recovering from a stagnant 2005.
So why the shock move? “The board judged that inflationary risks had increased sufficiently to warrant an increase,” said Reserve Bank of Australia Governor Ian Macfarlane. Consumer prices are currently rising in Australia at a rate of 3% a year, while underlying inflation has hit 2.75% - far ahead of the bank’s expectations.
Property firms and retailers bemoaned the move. They say they are already suffering the effects of high petrol prices on consumer demand. But if consumers are really feeling the pain that badly, it’s not showing up in borrowing figures. Loans to buy houses jumped by 13% in the year to March, and retail sales rose by 0.7% in February, far stronger than expected.
Of course, unlike the UK, Australia has the benefit of a strong export sector. The country supplies 43% of China’s iron ore and almost as much of its coal. Rising commodity prices suggest “a strengthening in the outlook for Australia’s export earnings, with consequent expansionary effects on incomes and spending,” said Mr Macfarlane.
But that doesn’t mean the UK won’t have to hike rates. The higher that global interest rates rise, the more difficult it is for other countries to maintain low rates. Generally, countries with lower interest rates will have weaker currencies – and a weak currency means imported inflation.
The dollar’s recent dive illustrates this point nicely. The greenback has fallen sharply against both the euro and the pound since recent comments by Fed chief Ben Bernanke were taken to mean that US interest rate hikes will end soon. Despite claims that the media had misunderstood what he said, the dollar’s decline has continued.
In fact, as one Money Morning reader points out, confidence in the US currency is so low that “even the Russians are putting the boot in.” An article in the Moscow Times points out that Finance Minister Alexei Kudrin has already declared the dollar as “unreliable as a reserve currency.”
What does this all add up to? When people are losing faith in the dollar, that means they are losing faith in paper money in general. We don’t imagine that the ruble will ever end up as the world’s reserve currency, for example.
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Australia ’s central bank has hiked the country’s key interest rate to 5.75%. The move was the first change in 14 months, and left the rate at its highest since February 2001.
The move took analysts by surprise. Shane Oliver at Sydney-based AMP Capital Markets described the move as “a knock on the head” for retail sales and the housing market, which have been steadily recovering from a stagnant 2005.
So why the shock move? “The board judged that inflationary risks had increased sufficiently to warrant an increase,” said Reserve Bank of Australia Governor Ian Macfarlane. Consumer prices are currently rising in Australia at a rate of 3% a year, while underlying inflation has hit 2.75% - far ahead of the bank’s expectations.
Property firms and retailers bemoaned the move. They say they are already suffering the effects of high petrol prices on consumer demand. But if consumers are really feeling the pain that badly, it’s not showing up in borrowing figures. Loans to buy houses jumped by 13% in the year to March, and retail sales rose by 0.7% in February, far stronger than expected.
Of course, unlike the UK, Australia has the benefit of a strong export sector. The country supplies 43% of China’s iron ore and almost as much of its coal. Rising commodity prices suggest “a strengthening in the outlook for Australia’s export earnings, with consequent expansionary effects on incomes and spending,” said Mr Macfarlane.
But that doesn’t mean the UK won’t have to hike rates. The higher that global interest rates rise, the more difficult it is for other countries to maintain low rates. Generally, countries with lower interest rates will have weaker currencies – and a weak currency means imported inflation.
The dollar’s recent dive illustrates this point nicely. The greenback has fallen sharply against both the euro and the pound since recent comments by Fed chief Ben Bernanke were taken to mean that US interest rate hikes will end soon. Despite claims that the media had misunderstood what he said, the dollar’s decline has continued.
In fact, as one Money Morning reader points out, confidence in the US currency is so low that “even the Russians are putting the boot in.” An article in the Moscow Times points out that Finance Minister Alexei Kudrin has already declared the dollar as “unreliable as a reserve currency.”
What does this all add up to? When people are losing faith in the dollar, that means they are losing faith in paper money in general. We don’t imagine that the ruble will ever end up as the world’s reserve currency, for example.
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Sunday, March 19, 2006
usa market , how will it effect interest rates march 19 2006
read this about the us market, how will this effect interest rates.
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The big news is that the US current account deficit rose to a new record - its ninth record high in ten years. The number for last year was $804 billion. The number for the last quarter of last year was $224 billion, which shows the trend is still upwards.At the current rate, the US current account deficit will hit $1 trillion within a year or two. It is already at 7% of GDP - a figure that would normally only be seen in a banana republic or an empire going bananas."A ticking time bomb," a Canadian economist calls the deficit. The US needs $2.5 billion dollars every day just to cover its borrowing needs. Already, China has lent the world's most prosperous nation so much money it has nearly $1 trillion worth of US government debt in its vaults. If the debtor is slave to the lender, as it tells us in the Bible, what does that make Americans? They'd rather not think about it. Besides, they have economists willing to delude them. And politicians able to defraud them."US tells China to cut its trade surplus," reads a headline in the FT.We wondered where was the equal and opposite headline: "China tells US to cut its trade deficit." But we could find it nowhere.We wondered, too, what big stick the US carried in its hand. What was it going to do...threaten to stop borrowing? Brandish a credit card? How would it fund its war on terror? Its consumer economy? Its housing bubble? America can speak loudly - for the benefit of American voters, we presume - but it has a limp noodle in its hands. The Chinese are the ones holding the big stick; they could dump their US debt holdings and clobber the American economy any time they wanted. But wait. Aren't American companies extremely profitable? And aren't they setting up plants overseas...buying overseas companies...and making deals to leverage their technology, their brands and their know-how on the world markets? Yes, of course they are. But that, too, is reflected in the current account numbers.In the 4th quarter of last year, for example, foreigners actually earned more from their US holdings than Americans earned from their holdings overseas - $132.6 billion compared to $129 billion. And even in the technology sector, where the US is supposed to have a commanding lead, Americans bought more from foreigners than they sold to them.Always grinding away, our General Theory of Grinding tells us that history never stops. She is the mistress of creative destruction, constantly turning things upside down and inside out...always undermining great empires...and eating away at great companies...she grinds men's pathetic little conceits, ambitions and pretensions to a fine dust.
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History cannot seem to leave well enough alone. Economies, societies, institutions...animals, vegetables and even minerals are always degenerating, degrading, and disappearing. When our present civilisation has finally gone away...what will be left of it? Just a few gold coins...and granite countertops...some converted into tombstones.A country should have a revolution every ten years, said Jefferson. He understood that you can't stand still. When a society reaches a certain level of success, it becomes a soft target for gamers. Parasites find the still unprotected spots and move in, like tapeworms into a fat man's belly. New life forms fill the hollow niches...and flourish. Opportunists leech onto the slow-moving hulk. Where a dynamic new republic pushes up its brightest and best to leadership positions - like Washington, Adams, and Jefferson himself - in the stagnant pool of an aging empire, the heavy thinkers sink to the bottom; what rises to the top are lightweight scum...the John Kerrys, George W.Bushes, and Hilary Clintons. Why doesn't the election process produce better political leaders? Because as time goes by, more and more people become complicit in decadence. The voters are farther and farther removed from the actual process of government...it is all only slogans and photo-ops to them. And the people close to power are the hacks and the hustlers, the politicians on the make, the parasites and players on the take. Laws multiply like the fishes and the loaves. Moses handed down only ten commandments. Jesus said only two of them were really important. But federal, state and local government give us ten thousand commandments - each one of them designed to protect or pamper some slimy creature living in some dark hole of the republic.More and more people get cheques, subsidies, grants and payoffs. More and more committees, agencies, and bureaus are set up to provide sinecures and curry favours. If we read it right, as many as half all the jobs created in America in the last five years were created by government! Nearly one-in-two British households now relies on the state for its income!Fraud and decrepitude seeps into the whole society. People begin to believe things that couldn't possibly be true - that deficits are good...that savings are unnecessary...that we don't actually have to make anything, we can just 'think' our way to prosperity. And as the structure degenerates and weakens, practically everyone, everywhere holds up his hands to try to prop it up.We see in Grant's Interest Rate Observer, for example, the efforts of US real estate appraisers to keep the bubble expanding. The Homebuilders Index is at a three-year low. Inventories are growing. But yet, the L.A. papers tell us that prices are still going up, pushed up in part by appraisers. This is revealed in the difference between the House Price Index of the FHEO - the Federal Housing Enterprise Oversight, no doubt a worthy and important agency - and its "Purchase Only Index". The House Price Index includes refinancings, which are based on appraisals. The Purchase Only Index does not; it is based only on what buyers were willing to pay.When you take into account the data that includes appraisals, house prices rose 12.95% in the 4th quarter of '05 over the year before. But when the appraisals are taken out, the number is only 10.8%.
pass our website to your friend www.factsonloans.com
here at facts on loans , join our free newsletter www.factsonloans.com
The big news is that the US current account deficit rose to a new record - its ninth record high in ten years. The number for last year was $804 billion. The number for the last quarter of last year was $224 billion, which shows the trend is still upwards.At the current rate, the US current account deficit will hit $1 trillion within a year or two. It is already at 7% of GDP - a figure that would normally only be seen in a banana republic or an empire going bananas."A ticking time bomb," a Canadian economist calls the deficit. The US needs $2.5 billion dollars every day just to cover its borrowing needs. Already, China has lent the world's most prosperous nation so much money it has nearly $1 trillion worth of US government debt in its vaults. If the debtor is slave to the lender, as it tells us in the Bible, what does that make Americans? They'd rather not think about it. Besides, they have economists willing to delude them. And politicians able to defraud them."US tells China to cut its trade surplus," reads a headline in the FT.We wondered where was the equal and opposite headline: "China tells US to cut its trade deficit." But we could find it nowhere.We wondered, too, what big stick the US carried in its hand. What was it going to do...threaten to stop borrowing? Brandish a credit card? How would it fund its war on terror? Its consumer economy? Its housing bubble? America can speak loudly - for the benefit of American voters, we presume - but it has a limp noodle in its hands. The Chinese are the ones holding the big stick; they could dump their US debt holdings and clobber the American economy any time they wanted. But wait. Aren't American companies extremely profitable? And aren't they setting up plants overseas...buying overseas companies...and making deals to leverage their technology, their brands and their know-how on the world markets? Yes, of course they are. But that, too, is reflected in the current account numbers.In the 4th quarter of last year, for example, foreigners actually earned more from their US holdings than Americans earned from their holdings overseas - $132.6 billion compared to $129 billion. And even in the technology sector, where the US is supposed to have a commanding lead, Americans bought more from foreigners than they sold to them.Always grinding away, our General Theory of Grinding tells us that history never stops. She is the mistress of creative destruction, constantly turning things upside down and inside out...always undermining great empires...and eating away at great companies...she grinds men's pathetic little conceits, ambitions and pretensions to a fine dust.
link to our home page on loans www.factsonloans.com
History cannot seem to leave well enough alone. Economies, societies, institutions...animals, vegetables and even minerals are always degenerating, degrading, and disappearing. When our present civilisation has finally gone away...what will be left of it? Just a few gold coins...and granite countertops...some converted into tombstones.A country should have a revolution every ten years, said Jefferson. He understood that you can't stand still. When a society reaches a certain level of success, it becomes a soft target for gamers. Parasites find the still unprotected spots and move in, like tapeworms into a fat man's belly. New life forms fill the hollow niches...and flourish. Opportunists leech onto the slow-moving hulk. Where a dynamic new republic pushes up its brightest and best to leadership positions - like Washington, Adams, and Jefferson himself - in the stagnant pool of an aging empire, the heavy thinkers sink to the bottom; what rises to the top are lightweight scum...the John Kerrys, George W.Bushes, and Hilary Clintons. Why doesn't the election process produce better political leaders? Because as time goes by, more and more people become complicit in decadence. The voters are farther and farther removed from the actual process of government...it is all only slogans and photo-ops to them. And the people close to power are the hacks and the hustlers, the politicians on the make, the parasites and players on the take. Laws multiply like the fishes and the loaves. Moses handed down only ten commandments. Jesus said only two of them were really important. But federal, state and local government give us ten thousand commandments - each one of them designed to protect or pamper some slimy creature living in some dark hole of the republic.More and more people get cheques, subsidies, grants and payoffs. More and more committees, agencies, and bureaus are set up to provide sinecures and curry favours. If we read it right, as many as half all the jobs created in America in the last five years were created by government! Nearly one-in-two British households now relies on the state for its income!Fraud and decrepitude seeps into the whole society. People begin to believe things that couldn't possibly be true - that deficits are good...that savings are unnecessary...that we don't actually have to make anything, we can just 'think' our way to prosperity. And as the structure degenerates and weakens, practically everyone, everywhere holds up his hands to try to prop it up.We see in Grant's Interest Rate Observer, for example, the efforts of US real estate appraisers to keep the bubble expanding. The Homebuilders Index is at a three-year low. Inventories are growing. But yet, the L.A. papers tell us that prices are still going up, pushed up in part by appraisers. This is revealed in the difference between the House Price Index of the FHEO - the Federal Housing Enterprise Oversight, no doubt a worthy and important agency - and its "Purchase Only Index". The House Price Index includes refinancings, which are based on appraisals. The Purchase Only Index does not; it is based only on what buyers were willing to pay.When you take into account the data that includes appraisals, house prices rose 12.95% in the 4th quarter of '05 over the year before. But when the appraisals are taken out, the number is only 10.8%.
pass our website to your friend www.factsonloans.com
Tuesday, March 14, 2006
loans interest rates, how will the dollar effect them
loans and interest rates
Longtime readers of my commentaries may recall that I have been waiting for the dollar to fall while US interest rates rise at the same time. Even though it may not be intuitive that the dollar could fall while interest rates rise, I think current events in both China and Japan are setting the stage for it to happen.
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Since 1992 more than four trillion dollars of foreign capital have been invested in the US. This capital influx was due to a series of currency crises, beginning with the Brazilian Real in 1992. Capital, seeking a safe haven, poured into the United States. Initially, this influx of capital caused US interest rates to fall, US corporate profits to rise and consumer spending to increase. The resultant bull market in stocks and bonds was fertile ground for investor speculation and gave rise to the high-tech, or Internet bubble. When the high-tech bubble burst, the Federal Reserve reacted by artificially driving interest rates even lower, causing a real estate bubble in the US and averting the collapse of the broader US stock market.
When the Southeast Asian currency crisis began in 1996 with the fall of the yen, the extraordinary amount of capital that flowed into the US caused an unprecedented rise in the US dollar exchange rate. This increase in the US dollar exchange rate in turn caused a decrease in the price of all things priced in dollars: oil, commodities, metals, gold and, of course, all US imports. Lower import prices in the US in turn lead to an expansion of the US trade deficit.
At the same time we also saw the emergence of China as an economic powerhouse, with a massive shift of manufacturing capacity away from North America and Europe to China. In order to maximize the benefit of the strong US dollar, both China and Japan elected not to sell the trade dollars they were receiving back into foreign exchange markets. Instead, they bought US Treasuries with those dollars.
Under normal circumstances, when a country such as Japan receives trade dollars due to its trade surplus with the United States, it sells those dollars in the foreign exchange markets. By selling dollars and buying yen, the trade imbalance would lower the exchange rate of the dollar and increase the exchange rate of the yen, thus increasing the cost of exports from Japan and increasing the cost of imports in the US, which would eventually neutralize the trade imbalance. But because both China and Japan (and several other Southeast Asian countries) withheld their trade dollars from foreign exchange markets, their export prices and US import prices were kept low. This caused an exacerbation of the US trade deficit, and it also kept US interest rates low since the bulk of those dollars were invested in US bonds.
Oil and metal prices declined precipitously during the late 1990s because of the rise in the US dollar exchange rate. Declines in metal and oil prices were far less pronounced in many other currencies and, in fact, the gold price increased in some currencies even while it was falling in US dollars. I realized during the late 1990s that the gold price (in US dollars) would not sustain a rally until we saw the end of the rise in the dollar itself. Between 1999 and 2001 the dollar rally petered out and by 2002 the dollar was entrenched in a bear market as the combination of falling interest rates in the US and the trade deficit took their toll. Oil, commodities, metals and gold prices started rising.
The increase in most metals and commodity prices were initially just a reflection of the falling US dollar exchange rate; however, because of the expansion occurring in China, among other things, some commodities and metals prices rose more than what could be accounted for by the dollar alone.
The gold price, on the other hand, was almost exactly paired to the US dollar exchange rate up to the middle of 2005.
Now we can evaluate the current situation with the twin deficits of the United States.
The US trade deficit simply means that US residents buy more imports than what they export. The net result of the trade deficit is that US dollars are being sent to other countries, and, as mentioned earlier, under normal circumstances those dollars would have been sold in foreign exchange markets, putting downward pressure on the dollar. A weaker dollar would translate into higher prices for US imports and lower prices for US exports and that would in turn cause a reduction, or elimination, of the trade imbalance. Therefore, the US trade deficit will eventually cause the US dollar to decline. The only reason it has not yet done so is because China, Japan, and several other countries are not selling their US dollars, but investing them in US Treasuries instead.
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That brings us to the US fiscal deficit. A fiscal deficit arises when the government spends more than it receives from taxes. The US fiscal deficit is much larger than the budget deficit and contrary to what the media and politicians would like you to believe, the US fiscal condition is worsening, not getting better.
The current debt limit for the US government is $8.184 trillion and if that limit is not raised by the middle of the month the government will likely go into default. All it means is that lawmakers will vote to increase the debt limit. But the amount by which they will increase the debt limit is what is interesting. The current proposal is for an increase of $781 billion. Why $781 billion? Probably because that is more or less what they expect the fiscal deficit will be for the next twelve months, or so.
During fiscal 2005 (that ended on September 30, 2005) the government's debt increased by $554 billion. Since then the debt has increased by $337 billion, which, when annualized, comes to $814 billion. Don't be misled by budget deficits: politicians can budget all they like but their spendthrift ways become evident in the increase in debt.
As an aside, the current debt of $8.27 trillion does not include unfunded liabilities of the US government, such as Social Security, Medicaid and Medicare. Including unfunded liabilities the US government is approximately $46 trillion in the hole.
The fiscal deficit means the US government continually has to issue more and more debt to finance its spending and the issuance of debt means an increase in the supply of US bonds that will ultimately lead to lower bond prices and higher interest rates. This is where the trade deficit and the fiscal deficit meet. Just like the trade deficit implies the dollar will fall, the fiscal deficit will ultimately cause US interest rates to rise.
Recall that China, Japan, and others were buying US Treasury debt (bonds) with their trade dollars instead of selling those dollars into foreign exchange markets. That is what kept the dollar afloat, but it is also what kept US medium to long term interest rates so low since no matter how much more debt the government issued, these nations stood ready to buy it.
Looking at this I realized that we are going to witness an unexpected turn of events. When China and Japan decide to stop buying US Treasuries with their trade surplus dollars, the US dollar exchange rate will fall simultaneous with rising US interest rates. This is not intuitive since common dogma suggests currencies rise when interest rates rise and fall when interest rates fall. Yet I believe that the US dollar is going to fall while US interest rates rise.
forward onto our website for free facts on loans and money saving tips www.factsonloans.com
Longtime readers of my commentaries may recall that I have been waiting for the dollar to fall while US interest rates rise at the same time. Even though it may not be intuitive that the dollar could fall while interest rates rise, I think current events in both China and Japan are setting the stage for it to happen.
Sponsored Links www.factsonloans.com
Since 1992 more than four trillion dollars of foreign capital have been invested in the US. This capital influx was due to a series of currency crises, beginning with the Brazilian Real in 1992. Capital, seeking a safe haven, poured into the United States. Initially, this influx of capital caused US interest rates to fall, US corporate profits to rise and consumer spending to increase. The resultant bull market in stocks and bonds was fertile ground for investor speculation and gave rise to the high-tech, or Internet bubble. When the high-tech bubble burst, the Federal Reserve reacted by artificially driving interest rates even lower, causing a real estate bubble in the US and averting the collapse of the broader US stock market.
When the Southeast Asian currency crisis began in 1996 with the fall of the yen, the extraordinary amount of capital that flowed into the US caused an unprecedented rise in the US dollar exchange rate. This increase in the US dollar exchange rate in turn caused a decrease in the price of all things priced in dollars: oil, commodities, metals, gold and, of course, all US imports. Lower import prices in the US in turn lead to an expansion of the US trade deficit.
At the same time we also saw the emergence of China as an economic powerhouse, with a massive shift of manufacturing capacity away from North America and Europe to China. In order to maximize the benefit of the strong US dollar, both China and Japan elected not to sell the trade dollars they were receiving back into foreign exchange markets. Instead, they bought US Treasuries with those dollars.
Under normal circumstances, when a country such as Japan receives trade dollars due to its trade surplus with the United States, it sells those dollars in the foreign exchange markets. By selling dollars and buying yen, the trade imbalance would lower the exchange rate of the dollar and increase the exchange rate of the yen, thus increasing the cost of exports from Japan and increasing the cost of imports in the US, which would eventually neutralize the trade imbalance. But because both China and Japan (and several other Southeast Asian countries) withheld their trade dollars from foreign exchange markets, their export prices and US import prices were kept low. This caused an exacerbation of the US trade deficit, and it also kept US interest rates low since the bulk of those dollars were invested in US bonds.
Oil and metal prices declined precipitously during the late 1990s because of the rise in the US dollar exchange rate. Declines in metal and oil prices were far less pronounced in many other currencies and, in fact, the gold price increased in some currencies even while it was falling in US dollars. I realized during the late 1990s that the gold price (in US dollars) would not sustain a rally until we saw the end of the rise in the dollar itself. Between 1999 and 2001 the dollar rally petered out and by 2002 the dollar was entrenched in a bear market as the combination of falling interest rates in the US and the trade deficit took their toll. Oil, commodities, metals and gold prices started rising.
The increase in most metals and commodity prices were initially just a reflection of the falling US dollar exchange rate; however, because of the expansion occurring in China, among other things, some commodities and metals prices rose more than what could be accounted for by the dollar alone.
The gold price, on the other hand, was almost exactly paired to the US dollar exchange rate up to the middle of 2005.
Now we can evaluate the current situation with the twin deficits of the United States.
The US trade deficit simply means that US residents buy more imports than what they export. The net result of the trade deficit is that US dollars are being sent to other countries, and, as mentioned earlier, under normal circumstances those dollars would have been sold in foreign exchange markets, putting downward pressure on the dollar. A weaker dollar would translate into higher prices for US imports and lower prices for US exports and that would in turn cause a reduction, or elimination, of the trade imbalance. Therefore, the US trade deficit will eventually cause the US dollar to decline. The only reason it has not yet done so is because China, Japan, and several other countries are not selling their US dollars, but investing them in US Treasuries instead.
tell you friends to sign up free at www.factsonloans.com to get hot loan news
That brings us to the US fiscal deficit. A fiscal deficit arises when the government spends more than it receives from taxes. The US fiscal deficit is much larger than the budget deficit and contrary to what the media and politicians would like you to believe, the US fiscal condition is worsening, not getting better.
The current debt limit for the US government is $8.184 trillion and if that limit is not raised by the middle of the month the government will likely go into default. All it means is that lawmakers will vote to increase the debt limit. But the amount by which they will increase the debt limit is what is interesting. The current proposal is for an increase of $781 billion. Why $781 billion? Probably because that is more or less what they expect the fiscal deficit will be for the next twelve months, or so.
During fiscal 2005 (that ended on September 30, 2005) the government's debt increased by $554 billion. Since then the debt has increased by $337 billion, which, when annualized, comes to $814 billion. Don't be misled by budget deficits: politicians can budget all they like but their spendthrift ways become evident in the increase in debt.
As an aside, the current debt of $8.27 trillion does not include unfunded liabilities of the US government, such as Social Security, Medicaid and Medicare. Including unfunded liabilities the US government is approximately $46 trillion in the hole.
The fiscal deficit means the US government continually has to issue more and more debt to finance its spending and the issuance of debt means an increase in the supply of US bonds that will ultimately lead to lower bond prices and higher interest rates. This is where the trade deficit and the fiscal deficit meet. Just like the trade deficit implies the dollar will fall, the fiscal deficit will ultimately cause US interest rates to rise.
Recall that China, Japan, and others were buying US Treasury debt (bonds) with their trade dollars instead of selling those dollars into foreign exchange markets. That is what kept the dollar afloat, but it is also what kept US medium to long term interest rates so low since no matter how much more debt the government issued, these nations stood ready to buy it.
Looking at this I realized that we are going to witness an unexpected turn of events. When China and Japan decide to stop buying US Treasuries with their trade surplus dollars, the US dollar exchange rate will fall simultaneous with rising US interest rates. This is not intuitive since common dogma suggests currencies rise when interest rates rise and fall when interest rates fall. Yet I believe that the US dollar is going to fall while US interest rates rise.
forward onto our website for free facts on loans and money saving tips www.factsonloans.com
Sunday, March 12, 2006
uk interest rates on hold, how japen effect it
uk interest rates on hold. no effect on loan and saving rates
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"Tokyo ends loose-money policy," says a New York Times headline.After 16 years of slump, deflation, bust and aimless chopping, Japan's economy seems to be stirring. It seems to be coming back to life. So, central bankers are taking down the I.V. drips of cash and credit that have kept the failing banks alive and encouraged bad investments. The patient is recovering and no longer needs constant medication.Henceforth, borrowers will have to pay for money in Japan just like they do everywhere else. And henceforth, speculators may not be as flush. For several years now they have been able to borrow from Japan at practically zero interest and re-deploy the money elsewhere. The world took to this easy money like a panda to bamboo shoots. The credit goosed up emerging markets in the Mid East...built factories in Asia...and even contributed to the boom in consumer spending in North America and the house-price bubble here in Britain...so much so, that the boomers - we mean, the consumer boomers - now seem to think they no longer need to save money.In January, the savings rate in the US fell to negative 0.5%, for the first time in history. Yet, more Americans than ever before are preparing to retire. What will they retire on? We don't know....They have houses. They have credit cards. And there is always that ready money in Asia to draw on, just in case."Trade balance hits new record," runs another headline. In January, Americans spent $68.5 billion more from foreigners than they earned from them. At this rate, in a year's time, the US trade balance will reach negative $822 billion...not too far from $1 trillion. And close enough to the point where the entire scheme blows up in our faces, though how much closer we don't know.Americans have always been famous for parting with money rather than saving it. But these days they are parting with so much that their own incomes aren't enough for it. The world's most prosperous people need other people's income to keep parting with cash at the same pace. When Americans buy a new Toyota, for example, they have to borrow the money from a finance company that also borrows - at the lowest rates it can get. So the rate they pay to buy their car depends on the rate the finance company can get...which mostly depends on the low rates set by the Bank of Japan and the Bank of Bernanke.It is thanks to easy credit from these two worthies, that the American lumpenhouseholder is able to buy his car at all - or even his house - without any money of his own. The sale brings dollars...and profits...to the Japanese... which are then recycled back to the US as debt, so the American consumer can dig himself into an even roomier hole.And here in Britain this morning, the press has this headline: "Courts swamped with bad debt cases." It could have been a headline from the US. For on both sides of the Atlantic, the proles are getting squeezed.In order to maintain his illusion of financial progress, the average working stiff has to borrow against his house...or on his credit cards. Borrowing has become easy - thanks to the aforementioned central bankers. Paying back may not be so easy.The same waves of globalized commerce that throw up glittering aisles full of tempting gadgets and gizmos for the lumpen in Long Beach and Loughborough...the same currents of trade that bring him automobiles from Asia and bananas from Latin America...are lapping against his own earning power, washing chunks of it away. Wages in rich countries are slowly being eroded...reduced to sea-level...brought down to the lowest common denominator the world labour market can produce.And meanwhile, the rich grow richer."World gains 102 more billionaires," says the Houston Chronicle. There are now 793 of them and their wealth is growing at 18% per year. Currently, they have about $2.6 trillion, according to the Forbes estimate.
tell you friends about the free facts on loans website newsletter
www.factsonloans.com
have you signed up for free newsletter at www.factsonloans.com
"Tokyo ends loose-money policy," says a New York Times headline.After 16 years of slump, deflation, bust and aimless chopping, Japan's economy seems to be stirring. It seems to be coming back to life. So, central bankers are taking down the I.V. drips of cash and credit that have kept the failing banks alive and encouraged bad investments. The patient is recovering and no longer needs constant medication.Henceforth, borrowers will have to pay for money in Japan just like they do everywhere else. And henceforth, speculators may not be as flush. For several years now they have been able to borrow from Japan at practically zero interest and re-deploy the money elsewhere. The world took to this easy money like a panda to bamboo shoots. The credit goosed up emerging markets in the Mid East...built factories in Asia...and even contributed to the boom in consumer spending in North America and the house-price bubble here in Britain...so much so, that the boomers - we mean, the consumer boomers - now seem to think they no longer need to save money.In January, the savings rate in the US fell to negative 0.5%, for the first time in history. Yet, more Americans than ever before are preparing to retire. What will they retire on? We don't know....They have houses. They have credit cards. And there is always that ready money in Asia to draw on, just in case."Trade balance hits new record," runs another headline. In January, Americans spent $68.5 billion more from foreigners than they earned from them. At this rate, in a year's time, the US trade balance will reach negative $822 billion...not too far from $1 trillion. And close enough to the point where the entire scheme blows up in our faces, though how much closer we don't know.Americans have always been famous for parting with money rather than saving it. But these days they are parting with so much that their own incomes aren't enough for it. The world's most prosperous people need other people's income to keep parting with cash at the same pace. When Americans buy a new Toyota, for example, they have to borrow the money from a finance company that also borrows - at the lowest rates it can get. So the rate they pay to buy their car depends on the rate the finance company can get...which mostly depends on the low rates set by the Bank of Japan and the Bank of Bernanke.It is thanks to easy credit from these two worthies, that the American lumpenhouseholder is able to buy his car at all - or even his house - without any money of his own. The sale brings dollars...and profits...to the Japanese... which are then recycled back to the US as debt, so the American consumer can dig himself into an even roomier hole.And here in Britain this morning, the press has this headline: "Courts swamped with bad debt cases." It could have been a headline from the US. For on both sides of the Atlantic, the proles are getting squeezed.In order to maintain his illusion of financial progress, the average working stiff has to borrow against his house...or on his credit cards. Borrowing has become easy - thanks to the aforementioned central bankers. Paying back may not be so easy.The same waves of globalized commerce that throw up glittering aisles full of tempting gadgets and gizmos for the lumpen in Long Beach and Loughborough...the same currents of trade that bring him automobiles from Asia and bananas from Latin America...are lapping against his own earning power, washing chunks of it away. Wages in rich countries are slowly being eroded...reduced to sea-level...brought down to the lowest common denominator the world labour market can produce.And meanwhile, the rich grow richer."World gains 102 more billionaires," says the Houston Chronicle. There are now 793 of them and their wealth is growing at 18% per year. Currently, they have about $2.6 trillion, according to the Forbes estimate.
tell you friends about the free facts on loans website newsletter
www.factsonloans.com
loans intrest rates stay the same, will japan effect the future
loans and facts on loans
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"Tokyo ends loose-money policy," says a New York Times headline.After 16 years of slump, deflation, bust and aimless chopping, Japan's economy seems to be stirring. It seems to be coming back to life. So, central bankers are taking down the I.V. drips of cash and credit that have kept the failing banks alive and encouraged bad investments. The patient is recovering and no longer needs constant medication.Henceforth, borrowers will have to pay for money in Japan just like they do everywhere else. And henceforth, speculators may not be as flush. For several years now they have been able to borrow from Japan at practically zero interest and re-deploy the money elsewhere. The world took to this easy money like a panda to bamboo shoots. The credit goosed up emerging markets in the Mid East...built factories in Asia...and even contributed to the boom in consumer spending in North America and the house-price bubble here in Britain...so much so, that the boomers - we mean, the consumer boomers - now seem to think they no longer need to save money.In January, the savings rate in the US fell to negative 0.5%, for the first time in history. Yet, more Americans than ever before are preparing to retire. What will they retire on? We don't know....They have houses. They have credit cards. And there is always that ready money in Asia to draw on, just in case."Trade balance hits new record," runs another headline. In January, Americans spent $68.5 billion more from foreigners than they earned from them. At this rate, in a year's time, the US trade balance will reach negative $822 billion...not too far from $1 trillion. And close enough to the point where the entire scheme blows up in our faces, though how much closer we don't know.Americans have always been famous for parting with money rather than saving it. But these days they are parting with so much that their own incomes aren't enough for it. The world's most prosperous people need other people's income to keep parting with cash at the same pace. When Americans buy a new Toyota, for example, they have to borrow the money from a finance company that also borrows - at the lowest rates it can get. So the rate they pay to buy their car depends on the rate the finance company can get...which mostly depends on the low rates set by the Bank of Japan and the Bank of Bernanke.It is thanks to easy credit from these two worthies, that the American lumpenhouseholder is able to buy his car at all - or even his house - without any money of his own. The sale brings dollars...and profits...to the Japanese... which are then recycled back to the US as debt, so the American consumer can dig himself into an even roomier hole.And here in Britain this morning, the press has this headline: "Courts swamped with bad debt cases." It could have been a headline from the US. For on both sides of the Atlantic, the proles are getting squeezed.In order to maintain his illusion of financial progress, the average working stiff has to borrow against his house...or on his credit cards. Borrowing has become easy - thanks to the aforementioned central bankers. Paying back may not be so easy.The same waves of globalized commerce that throw up glittering aisles full of tempting gadgets and gizmos for the lumpen in Long Beach and Loughborough...the same currents of trade that bring him automobiles from Asia and bananas from Latin America...are lapping against his own earning power, washing chunks of it away. Wages in rich countries are slowly being eroded...reduced to sea-level...brought down to the lowest common denominator the world labour market can produce.And meanwhile, the rich grow richer."World gains 102 more billionaires," says the Houston Chronicle. There are now 793 of them and their wealth is growing at 18% per year. Currently, they have about $2.6 trillion, according to the Forbes estimate.
pass our site onto your friend , for free newsletter on loans and saving rates
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sign up for our free newsletter at www.factsonloans.com
"Tokyo ends loose-money policy," says a New York Times headline.After 16 years of slump, deflation, bust and aimless chopping, Japan's economy seems to be stirring. It seems to be coming back to life. So, central bankers are taking down the I.V. drips of cash and credit that have kept the failing banks alive and encouraged bad investments. The patient is recovering and no longer needs constant medication.Henceforth, borrowers will have to pay for money in Japan just like they do everywhere else. And henceforth, speculators may not be as flush. For several years now they have been able to borrow from Japan at practically zero interest and re-deploy the money elsewhere. The world took to this easy money like a panda to bamboo shoots. The credit goosed up emerging markets in the Mid East...built factories in Asia...and even contributed to the boom in consumer spending in North America and the house-price bubble here in Britain...so much so, that the boomers - we mean, the consumer boomers - now seem to think they no longer need to save money.In January, the savings rate in the US fell to negative 0.5%, for the first time in history. Yet, more Americans than ever before are preparing to retire. What will they retire on? We don't know....They have houses. They have credit cards. And there is always that ready money in Asia to draw on, just in case."Trade balance hits new record," runs another headline. In January, Americans spent $68.5 billion more from foreigners than they earned from them. At this rate, in a year's time, the US trade balance will reach negative $822 billion...not too far from $1 trillion. And close enough to the point where the entire scheme blows up in our faces, though how much closer we don't know.Americans have always been famous for parting with money rather than saving it. But these days they are parting with so much that their own incomes aren't enough for it. The world's most prosperous people need other people's income to keep parting with cash at the same pace. When Americans buy a new Toyota, for example, they have to borrow the money from a finance company that also borrows - at the lowest rates it can get. So the rate they pay to buy their car depends on the rate the finance company can get...which mostly depends on the low rates set by the Bank of Japan and the Bank of Bernanke.It is thanks to easy credit from these two worthies, that the American lumpenhouseholder is able to buy his car at all - or even his house - without any money of his own. The sale brings dollars...and profits...to the Japanese... which are then recycled back to the US as debt, so the American consumer can dig himself into an even roomier hole.And here in Britain this morning, the press has this headline: "Courts swamped with bad debt cases." It could have been a headline from the US. For on both sides of the Atlantic, the proles are getting squeezed.In order to maintain his illusion of financial progress, the average working stiff has to borrow against his house...or on his credit cards. Borrowing has become easy - thanks to the aforementioned central bankers. Paying back may not be so easy.The same waves of globalized commerce that throw up glittering aisles full of tempting gadgets and gizmos for the lumpen in Long Beach and Loughborough...the same currents of trade that bring him automobiles from Asia and bananas from Latin America...are lapping against his own earning power, washing chunks of it away. Wages in rich countries are slowly being eroded...reduced to sea-level...brought down to the lowest common denominator the world labour market can produce.And meanwhile, the rich grow richer."World gains 102 more billionaires," says the Houston Chronicle. There are now 793 of them and their wealth is growing at 18% per year. Currently, they have about $2.6 trillion, according to the Forbes estimate.
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Thursday, March 09, 2006
today interest and loans rate , will they move.
loans and saving will find out today , what is happening next
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Back in the UK, the Bank of England will announce its latest decision on interest rates later today. It is expected that the key UK rate is likely to remain frozen at 4.5%. The Bank's specific concerns include the impact of rising energy bills on inflation, and the potential for any rate cuts to reinflate the housing bubble.
the dollar could be the answer read on.
Almost the entire edifice of neo-classical economics and modern financial theory is predicated on the assumption that investors act rationally. After all, why would anyone wield their hard-earned funds in an irresponsibly unhinged way? More to the point, surely anyone who did so would quickly lose their shirt and be unceremoniously removed from the game?
But the thing is that, although investors are, on the whole, rational, markets can take their time to come to their senses. Remember the dotcom bubble? Sure, none of the valuations made any sense. Absolutely, it was all going to end in tears. But it took its own time to run full circle.
The dotcom bubble may be an ever-diminishing memory in the rear-view mirror of the past, but markets are again doing the “wrong thing”. They’re not being rational, and once again Warren Buffett, who famously missed out on the whole tech-market rally, appears to have got it wrong.
His Berkshire Hathaway group had a “very long-term” bet against the US dollar that by June totalled $21.5bn. However, after the first six months of 2005, the dollar had risen more than 10% and Buffett was down $926m. He has subsequently been forced to cut his exposure back.
This was not supposed to happen. Buffett, and he was not alone, predicted that the dollar would weaken because of the huge US trade deficit. As the US sucked in more and more goods from around the world, the sellers of those goods would be receiving dollars and (since they weren’t spending them on US-made goods) exchanging them into their own domestic currency. Wouldn’t they?
Apparently not. It turns out that the countries with the biggest trading surpluses – Japan, Korea and, increasingly, China – haven’t been selling their hard-earned dollars. Instead, they’ve been buying US government bonds with them; effectively lending the money back to Americans to spend on yet more imports. Today, America receives three-quarters of the rest of the world’s savings.So attractive and cheap and free-flowing is this supply of credit that the US household savings rate is now below zero for the first time since 1933.
This makes sense to the Asians. They are having a tough time encouraging consumption at home, so their economies rely on the export industries for growth. It would be cutting off their noses to spite their face to push the dollar down, as that would push their export prices up. So far this year the US is the only major economy with rising short-term rates, so it’s no wonder the dollar has been on the up.
But there is a reason for America’s deficits, according to Fed chairman-in-waiting, Ben Bernanke. “There’s a glut of global savings,” he says. Roughly translated, his point is that it’s everyone else’s fault that the Americans are all up to their eyebrows in debt, because they shouldn’t have been lent the money in the first place.
Technically speaking, he is correct, in that one county’s deficit must be another’s surplus. But it’s just tautological nonsense to say that it’s a glut of global savings that is causing the US to go mad with its credit cards and that this won’t have nasty consequences. The world hasn’t seen a major economy run deficits of this size in modern times - so we can’t be sure it'll all end in tears. But it makes sense to think that anyone, or indeed any nation, that spends money now that it doesn’t have, will have to forgo that money later.
The Americans can’t live beyond their means forever. So what will this mean? When the US gradually ran down its current account deficit between 1987 and 1991, the dollar fell about a third, even though interest rates rose, unemployment went up and the economy slowed sharply. Such periods usually see inflation rising too, because a weaker currency means import prices rise.
It’s not happening yet, I grant you, but when you’ve got people such as Warren Buffett betting $20bn that it could be soon, it’d be foolish to suppose that America can continue partying on with impunity forever.
If building up deficits means strong, inflation-free, full-employment growth with low rates and strong asset markets, it rather suggests that unwinding them will give you the opposite. There is also a concern that the world’s “savings glut” will find a new home for its money, in effect forcing the Americans to stop living beyond their means.
With an inheritance like that, no wonder Bernanke would like to have us all believe this is a sustainable position, but I think we all know that it’s not. Likewise, even if his timing has been a bit out, you can see where Buffett’s mind is going. America has all the debt and everyone else holds all the IOUs, but it’s still Bernanke who controls the printing presses, so it’ll be awfully tempting for him to inflate his way out of trouble simply by expanding the money supply at speed.
That would make the dollar collapse, for certain. But the pain would all be with creditors (read ‘foreigners’) and the gain with the spendthrift debtors (read ‘US voters’). I don’t know about you, but I wouldn’t want a job abroad right now that paid in US dollars.
pass this web site www.factsonloans.com
to friends and family , so everybody is up to speed on the factsonloans.
go to www.factsonloans.com sign up for free newsletter to find the factsonloans
Back in the UK, the Bank of England will announce its latest decision on interest rates later today. It is expected that the key UK rate is likely to remain frozen at 4.5%. The Bank's specific concerns include the impact of rising energy bills on inflation, and the potential for any rate cuts to reinflate the housing bubble.
the dollar could be the answer read on.
Almost the entire edifice of neo-classical economics and modern financial theory is predicated on the assumption that investors act rationally. After all, why would anyone wield their hard-earned funds in an irresponsibly unhinged way? More to the point, surely anyone who did so would quickly lose their shirt and be unceremoniously removed from the game?
But the thing is that, although investors are, on the whole, rational, markets can take their time to come to their senses. Remember the dotcom bubble? Sure, none of the valuations made any sense. Absolutely, it was all going to end in tears. But it took its own time to run full circle.
The dotcom bubble may be an ever-diminishing memory in the rear-view mirror of the past, but markets are again doing the “wrong thing”. They’re not being rational, and once again Warren Buffett, who famously missed out on the whole tech-market rally, appears to have got it wrong.
His Berkshire Hathaway group had a “very long-term” bet against the US dollar that by June totalled $21.5bn. However, after the first six months of 2005, the dollar had risen more than 10% and Buffett was down $926m. He has subsequently been forced to cut his exposure back.
This was not supposed to happen. Buffett, and he was not alone, predicted that the dollar would weaken because of the huge US trade deficit. As the US sucked in more and more goods from around the world, the sellers of those goods would be receiving dollars and (since they weren’t spending them on US-made goods) exchanging them into their own domestic currency. Wouldn’t they?
Apparently not. It turns out that the countries with the biggest trading surpluses – Japan, Korea and, increasingly, China – haven’t been selling their hard-earned dollars. Instead, they’ve been buying US government bonds with them; effectively lending the money back to Americans to spend on yet more imports. Today, America receives three-quarters of the rest of the world’s savings.So attractive and cheap and free-flowing is this supply of credit that the US household savings rate is now below zero for the first time since 1933.
This makes sense to the Asians. They are having a tough time encouraging consumption at home, so their economies rely on the export industries for growth. It would be cutting off their noses to spite their face to push the dollar down, as that would push their export prices up. So far this year the US is the only major economy with rising short-term rates, so it’s no wonder the dollar has been on the up.
But there is a reason for America’s deficits, according to Fed chairman-in-waiting, Ben Bernanke. “There’s a glut of global savings,” he says. Roughly translated, his point is that it’s everyone else’s fault that the Americans are all up to their eyebrows in debt, because they shouldn’t have been lent the money in the first place.
Technically speaking, he is correct, in that one county’s deficit must be another’s surplus. But it’s just tautological nonsense to say that it’s a glut of global savings that is causing the US to go mad with its credit cards and that this won’t have nasty consequences. The world hasn’t seen a major economy run deficits of this size in modern times - so we can’t be sure it'll all end in tears. But it makes sense to think that anyone, or indeed any nation, that spends money now that it doesn’t have, will have to forgo that money later.
The Americans can’t live beyond their means forever. So what will this mean? When the US gradually ran down its current account deficit between 1987 and 1991, the dollar fell about a third, even though interest rates rose, unemployment went up and the economy slowed sharply. Such periods usually see inflation rising too, because a weaker currency means import prices rise.
It’s not happening yet, I grant you, but when you’ve got people such as Warren Buffett betting $20bn that it could be soon, it’d be foolish to suppose that America can continue partying on with impunity forever.
If building up deficits means strong, inflation-free, full-employment growth with low rates and strong asset markets, it rather suggests that unwinding them will give you the opposite. There is also a concern that the world’s “savings glut” will find a new home for its money, in effect forcing the Americans to stop living beyond their means.
With an inheritance like that, no wonder Bernanke would like to have us all believe this is a sustainable position, but I think we all know that it’s not. Likewise, even if his timing has been a bit out, you can see where Buffett’s mind is going. America has all the debt and everyone else holds all the IOUs, but it’s still Bernanke who controls the printing presses, so it’ll be awfully tempting for him to inflate his way out of trouble simply by expanding the money supply at speed.
That would make the dollar collapse, for certain. But the pain would all be with creditors (read ‘foreigners’) and the gain with the spendthrift debtors (read ‘US voters’). I don’t know about you, but I wouldn’t want a job abroad right now that paid in US dollars.
pass this web site www.factsonloans.com
to friends and family , so everybody is up to speed on the factsonloans.
Wednesday, March 08, 2006
loans , which way are interest rates moving
loans are set to move ,which way
here at www.factsonloans.com for free newsletterwe are watching where intrest rates are
heading.Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest ratesgo to www.factsonloans.com for free newsletter, have a click around.tell your friends about the site
here at www.factsonloans.com for free newsletterwe are watching where intrest rates are
heading.Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest ratesgo to www.factsonloans.com for free newsletter, have a click around.tell your friends about the site
Tuesday, March 07, 2006
where is loan intrest rates heading 7 feb 06
here at www.factsonloans.com for free newsletterwe are watching where intrest rates are heading.
Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest ratesgo to www.factsonloans.com for free newsletter, have a click around.tell your friends about the site
Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest ratesgo to www.factsonloans.com for free newsletter, have a click around.tell your friends about the site
Saturday, March 04, 2006
loan interest, where is it heading
here at www.factsonloans.com for free newsletter
we are watching where intrest rates are heading.
Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.
The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.
But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.
While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest rates
go to www.factsonloans.com for free newsletter, have a click around.
tell your friends about the site
we are watching where intrest rates are heading.
Central banks around the world are raising or about to raise interest rates. All except our own Bank of England.
The European Central Bank yesterday raised the key eurozone interest rate to 2.5%. It’s the second rate hike in four months, and comes amid concerns about rising inflation, property bubbles, and evidence that the region’s economy is showing signs of improving growth.
But back in the UK, analysts cling to the hope that slowing economic growth will eventually lead the Bank of England to trim rates this year.
While we don’t doubt that the UK’s economic growth is weak and getting weaker, there’s still the other part of the interest rate equation to worry about – inflation…
sign up for our free newsletter to see the best place to move your money, for loans, morgtages,credit card rates, best intrest rates
go to www.factsonloans.com for free newsletter, have a click around.
tell your friends about the site
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