RBA and BoE tipped to hike this week while ECB holds at 2.5%
In short
- The RBA decides on Tuesday: 31 of 32 economists expect a hike to 4.85%. The Bank of England decides on Thursday at 12:00 UK time; markets expect a rise from 3.75% to 4%.
- The ECB stays at 2.5% and is not expected to join the hikes; the Fed has a 72% chance of a hike in December, and Governor Logan wants at least two more.
- At 7:00 a.m. Sofia time the euro is worth £0.8338 and $1.1172; the DAX fell 0.85% on Friday and the Euro Stoxx 50 1.22%.
Central banks around the world are raising rates this week, while the ECB holds at 2.5%. For UK savers and borrowers the key date is Thursday, when the Bank of England decides.
What happened
The RBA decides on Tuesday; according to investingLive, 31 of 32 economists polled expect a hike to 4.85%, with only Deutsche Bank expecting a hold. The Bank of England announces its decision on Thursday at 12:00 UK time alongside its quarterly report. Acorn Finance puts Bank Rate at 3.75%, and The British Eye reports that a rise to 4% is expected. MarketScreener adds that markets expect a hike from the Riksbank too, while Norges Bank is seen on hold.
The ECB held its rate at 2.5% last Thursday. At the Fed, investingLive reports that Governor Logan said at least two more quarter-point hikes are needed; futures price a 72% chance of a hike in December.
European shares ended Friday lower: the DAX closed at 25,818 (−0.85%), the Euro Stoxx 50 at 6,131 (−1.22%) and ASML fell 6.1%. This morning’s futures are little changed (Eurostoxx +0.1%, DAX flat). Interest-rate gaps between central banks tend to move exchange rates; the pound is at about $1.34.
What it means for you
The maths: on a £200,000 mortgage over 25 years, a rate of 4.75% means payments of about £1,140.23 a month. At 5.00% they are £1,169.18 – £28.95 more every month, or about £8,680 over 25 years. This is an illustration of what 0.25 percentage points does, not a forecast for your own deal.
See also: live UK and European stock prices and gold prices in the UK.
Bottom line
The RBA and the Bank of England are expected to raise rates this week, while the ECB stays at 2.5%. In the US, markets give a 72% chance of a Fed hike in December.
Sources: MarketScreener · investingLive · Acorn Finance · The British Eye
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For information only. This is not investment advice.
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