Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Choosing the Best Garage Floor Containment Mats - 23rd Jan 20
Understanding the Benefits of Cannabis Tea - 23rd Jan 20
The Next Catalyst for Gold - 23rd Jan 20
5 Cyber-security considerations for 2020 - 23rd Jan 20
Car insurance: what the latest modifications could mean for your premiums - 23rd Jan 20
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

UK Interest Rates held at 5.5% and on Target for 5% by September 2008

Interest-Rates / UK Interest Rates Jan 10, 2008 - 10:34 AM GMT

By: Nadeem_Walayat

Interest-Rates

The Bank of England held interest rates at 5.50% following Decembers 0.25% cut from 5.75%, with the trend inline with the Market Oracle forecast as of 22nd August 07 for UK interest rates to fall to 5% by September 2008.

Yesterdays news of the continuing deterioration of the UK economy as over indebted consumers cut back on consumption as illustrated by Marks and Spencer's announcement of a drop on Christmas sales and calls by company's chief executive, Sir Stuart Rose, joined in calls for the Bank of England to cut interest rates to stimulate the economy, would have been countered by the increasing inflationary pressures as Gordon Brown seeks to restrain the public sector pay via a three year pay deal. Which is likely to lead to major tensions with the Unions.


The Market Oracle forecast as of 22nd August 07 , is for UK interest rates to fall to 5% by September 2008, with the first cut originally scheduled to occur in January 2008 . Given the sharp drop in the housing market and signs of a fast weakening economy, the first cut occurred a month earlier than forecast i.e. December 07. However, UK inflation is expected to continue rising into January, with the Market Oracle forecast for UK inflation to peak during January 2008 and then decline sharply to below 3% by November 2008 (RPI) , which will ensure the Bank of England keeps cutting interest rates during 2008 after a brief pause, the next cut is now scheduled for March 08.

The UK housing markets fast deterioration is expected to result in annualised UK House price inflation going negative for the first time since the early 1990's by April 2008, this is expected to be followed by a sharp fall in house prices as the buy to let sector rush for the exit to take advantage of the Uk capital gains tax change effective from 1st April 2008.

The Big Freeze continues to tighten on the UK commercial property market with Britain's fourth biggest insurer, Friends Provident freezing its Property Fund in December and thereby denying over 110,000 investors the ability to liquidate their investments. The unfolding crash in the commercial real estate market may the biggest in 27 years as valuations are cut on holdings of the UK's £700 billion commercial property market. As highlighted periodically over the last 6 months, funds running short of cash in the wake of investor redemptions will be forced to sell properties and thereby driving down commercial property values in an ever increasing downward spiral.

The Market Oracle forecast is for a 15% drop in UK House over the next 2 years with London expected to drop by as much as 25%, as of 22nd August 07. (the below graph will be updated on Halifax's data release later this month).

Despite the December rate cut, the UK property market remains at historically high unaffordability levels as illustrated by the Market Oracle UK House Price Affordability Index (Sept 07).

UK House Price Affordability Index

The minutes of the meeting will be published at 9.30am on Wednesday 23 January.

By Nadeem Walayat

Copyright © 2005-08 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 20 years experience of trading, analysing and forecasting the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

ian
10 Jan 08, 16:58
UK House Price Crash

Crash it will be in 2008.

What analysts ignore is that the record borrowings are for an ever lower quality of the property. I first bought a detatched house 25 years ago and if I look today at the multiple of income of the house price to salary it was maybe 4 at most - that same house today, for a new qualified chartered accountant - would be valued at a multiple in excess of 10 times salary

so who is lending at anything like that level? No -one today

so what has to happen? the price will fall

property shortage? this is a myth - when my father was a boy property prices were one times salary - a couple of decades before several generations lived in the same house. Even a slight return to that (for economic reasons) will have a dramatic impact on the market.

Today I walked around several agents - in one there are two very eager sellers offering 'no chain'? I asked what that meant? - they are moving in with relatives!

I asked why the agents window did not show a price reduction - the agent said the sellers are ready to reduce prices further (existing price reductions had not been obviously posted - as the agents wish to demonstrate prices in the area are stable!) I wonder how long that fix will last? and how many mugs they will con before it all falls apart.

I sold last October - and will provbably buy in 2009 - or in an auction late 2008.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules