RBI hikes lending rate, loans likely to become dearer

Bank of England Governor warns no deal Brexit is an ‘uncomfortably high’ possibility

While the Reserve Bank of India (RBI) has hiked the repo rate by 25 basis points (bps) for a second time this year, banks are expected to raise term deposit rates only gradually as liquidity in the system is fairly adequate.

The rate action was in line with a Reuters poll last week, which showed 37 of 63 economists expecting a rate increase. "Serious end-user demand is back on the market and marginal hikes in home loan rates are unlikely to deter buyers", Puri said.

He said: 'Tracker mortgage customers who wish to get a bespoke idea of what a rate rise means for their individual circumstances should click on our interest rate change calculator.

The MPC baulked at a rate rise earlier this year after the economy dipped as a result of the extreme winter weather caused by the "beast from the east".

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The Bank of England has opted to push interest rates above their financial crisis lows.

RBI in its policy statement has said that the risks to its 4 per cent inflation outlook has increased since its last meeting in June on account of rising trade tensions.

California wildfires scorch an area the size of Los Angeles
Jennings said both the Vichy Fire and Western Fire were officially Cal Fire incidents and he could not provide further details. The fire has killed six people in Shasta County, including two firefighters, and destroyed 1,555 structures.

In comments that will anger Brexiteers, the Bank of England Governor said Britain "accidentally" leaving the European Union without a deal and no transition in March 2019 would be "highly undesirable" for the economy.

"Scotland's growth over the last three years has lagged behind the United Kingdom, so whilst the Bank may judge that the United Kingdom economy is in sufficiently robust health to cope with a rate hike, a rate rise in Scotland may be more of a challenge". "For example, the average five-year fixed rate has increased by just 0.05% since November 2017 stand at 2.93% today".

The Bank of England (BoE) has raised the interest rate in the United Kingdom for the second time in a decade.

This is because monetary policy and macroeconomic fundamentals are expected to take a back seat over the next nine months as the ebb and flow of the Brexit negotiations, uncertainty over the final outcome and the prospect of an all-out meltdown in domestic politics remain front and centre for markets. Greater clarity on MSPs, crude oil prices and other inflationary trends, fiscal risks and the central and state government borrowing programme for H2 FY2019, may emerge as triggers for a rise in bond yields.

The Bank of England will also release its latest forecasts for economic growth, jobs and inflation on Thursday.

Adjusted for the BoE's inflation target, this would imply Bank Rate of 2-3 percent to keep growth and inflation rates stable when the economy is running at full capacity.

The Bank kept its forecast for United Kingdom growth unchanged at 1.4 per cent for 2018, but upped its prediction to 1.8 per cent after Brexit in 2019. The BoE said that further rate hikes would be gradual and limited and the market is now pricing in the next 0.25% hike in September 2019.

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