Bank of England breaks with Fed lead and increases Base rate by 0.5% to 5%

Bank of England breaks with Fed lead and increases Base rate by 0.5% to 5%

12:16 PM, 22nd June 2023, About 10 months ago 15

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The Bank of England’s Monetary Policy Committee voted 7 to 2 to increase the Base rate by 0.5% against the expected 0.25% to a new post-credit crisis high of 5%. Interestingly the two dissenting Doves voted for no increase and to hold at 4.5%

The Bank of England stand accused of undershooting base rate increases, not following the Fed fast enough and now they look like they are overshooting to compensate. This is after the Fed recently announced they were putting rate increases on hold with US CPI inflation at 4% and protecting the small to medium-sized US banks overexposed to low-yielding bond investments.

Andrew Bailey does not seem to recognise the economic power of managing expectations. Market expectations on their own can dampen inflationary pressures without necessarily needing to increase rates by just looking and sounding like you are going to. Look at two-year fixed rates now beyond 6%.

CPI inflation did remain sticky this month at a static 8.7%

The May Monetary Policy Report indicated a Bank Rate average of just over 4% for the next three years. However, gilt yields have risen significantly, particularly over two years, causing a revised predicted average for the same three-year period of 5½%. This caused mortgage rates to rise and the sterling effective exchange rate to appreciate. Additionally, annual growth in private sector regular Average Weekly Earnings increased to 7.6% in the three months to April, 0.5% above expectations.

The MPC summary reported:

“CPI inflation is expected to fall significantly further during the course of the year, in the main reflecting developments in energy prices. Services CPI inflation is projected to remain broadly unchanged in the near term. Core goods CPI inflation is expected to decline later this year, supported by developments in cost and price indicators earlier in the supply chain. In particular, annual producer output price inflation has fallen very sharply in recent months. Food price inflation is projected to fall further in coming months.

“The MPC recognises that the second-round effects in domestic price and wage developments generated by external cost shocks are likely to take longer to unwind than they did to emerge. There has been significant upside news in recent data that indicates more persistence in the inflation process, against the background of a tight labour market and continued resilience in demand.”

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12:32 PM, 22nd June 2023, About 10 months ago

Oh dear, this really is another nail in the coffin of anyone in BTL who has a mortgage. Guess there will be many landlords saying we will put the rent up, afraid that won't work now as most renters will be at thire limit of affordability. The courts are already jammed up and I guess S21's will increase and tenants will just sit tight until the bailif breaks the door down. I wonder how Labour intend to resolve this as the Conservatives don't really have much idea.


12:43 PM, 22nd June 2023, About 10 months ago

Bugga ❤️ o well we have had a apr holiday last few years, im stuck in the devil and deep blue sea, at 68 do I sell, remortgage (a pain in the backside at the mo} the surveyor is God or the Devil, depending on their esteemed opinions, me thinks......Ive had a bad run lol
Anyway, we dig in, the ancient law of averages normally proves correct..... looks like I will sell 50% and keep 50% bound to win somewhere :}
Please excuse my ramblings, just writing me thoughts, im sure many others are doing the same, depending on their goals dreams and aspirations,of course attitude is everything, easy to be a motivational leader when things are shining lol the real test is now imho, hang in there, hopefully things will swing the other way in the next year or so ..😊


13:03 PM, 22nd June 2023, About 10 months ago

This is excellent news, I can now charge my tenants a full 8% on overdue rent (3% above base), I guess that this is what Generation Rent, Shelter, Acorn et al wanted. The tenants will not pay but it gets them to that magic 'two month arrears' just that little bit faster.


13:08 PM, 22nd June 2023, About 10 months ago

Reply to the comment left by Smiley at 22/06/2023 - 12:43
I have sold more than 50% already as I am getting on a bit. Luckily I am mortgage free but I I don't really want to be in BTL any more


13:09 PM, 22nd June 2023, About 10 months ago

Reply to the comment left by TheMaluka at 22/06/2023 - 13:03
Good luck with that, I predict rather than pay it they will just stop paying and little you can do


13:22 PM, 22nd June 2023, About 10 months ago

Reply to the comment left by GlanACC at 22/06/2023 - 13:09
My point is they have already stopped paying.

Do you not recognise irony when it is presented to you?


14:33 PM, 22nd June 2023, About 10 months ago

The powers that be are now well on their way to further ousting smaller landlords with mortgages, paving the way for mass corporate rental ownership and control.
The added bonus of an incoming recession / financial crisis will help set the scene for the CBDC money agenda too!


15:03 PM, 22nd June 2023, About 10 months ago

Reply to the comment left by TheMaluka at 22/06/2023 - 13:22
Yes, irony, not funny is it when they stop paying. Doesn't matter what threats you make they just ignore them. The power of the courts will make it as difficult as possible to get rid of someone.

Bristol Landlord

15:36 PM, 22nd June 2023, About 10 months ago

Firstly, I do struggle to decide whether Andrew Bailey is actually this incompetent or is simply carrying out someone else’s agenda?
Perhaps it’s both at the same time?
I do not believe for one second that the BoE is actually independent of the UK Govt or anyone else. Yes they are supposed to be, but who actually believes that?
It’s apparent to me the BoE are carrying out the policies and instructions or acting in coordination with powerful and wealthy people. These people being inside the ruling establishment whether in London, Washington or New York.
Secondly this shows beyond doubt they are pure psychopaths who simply do not care one whit for the livelihood and well being of the majority of UK residents, whether a mortgage holder or not, the majority of ordinary people are going to suffer.
You can now expect powerful multinational corporations such as Blackrock to sweep up tens of thousands of properties from financially distressed sellers, be they landlords or owner occupiers.


15:55 PM, 22nd June 2023, About 10 months ago

Reply to the comment left by GlanACC at 22/06/2023 - 15:03
Landlords are not allowed to threaten tenants. The only lever we have is to take legal action for one or more breaches of the tenancy, given that section 21 is now so difficult as to be near impossible.

No it is not funny when tenants stop paying and my way of coping is to make ironic comments on social media and in so doing perhaps put a smile on some faces.

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