UK rates raised to highest since 2009 despite Brexit worries

UK rates raised to highest since 2009 despite Brexit worries

UK rates raised to highest since 2009 despite Brexit worries

RBI hikes repo rate: On Wednesday, the Reserve Bank of India (RBI) increased the repo rate by 25 basis points to 6.5 per cent.

The Bank of England's Monetary Policy Committee (MPC) has voted unanimously to raise the Bank Rate from 0.5% to 0.75%.

The Reserve Bank of India (RBI) today hiked the repo rates, or interest rates at which the country's central bank lends money to banks.

Benson Hersch, CEO at the ASTL, said: "Today's announcement that interest rates are rising will as expected have a major impact on longer-term lenders, as they may feel compelled to raise rates".

RBI also raised the inflation projection to 4.6 per cent in second quarter of fiscal 2019, 4.8 per cent in second half of 2018-19 and 5 per cent in first quarter of 2019-20.

The statement noted that "fuel and light group" inflation rose sharply in the period since the previous policy review, pulled up by liquefied petroleum gas (LPG) and kerosene prices. Two successive rate hikes indicate the beginning of a rate-hiking cycle even though there is no certainty on when the central bank will go for its next rate hike.

Hinting at sticking to the deficit targets, Patel said, "We do have things that are in our favour, which you're aware of, and if we continue along that path, we ensure that we don't add to the global risk profile that would adversely affect us".

She said: "The Bank of England must tread carefully when it comes to further changes in interest rates".

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Led by governor Mark Carney, the Bank is now confident that the dip was temporary and that economic growth will recover from the 0.2% rate seen in the first quarter, to 0.4% in the second quarter and maintain that pace later in the year.

"The decision to keep the stance in neutral mode indicates RBI's willingness to be flexible and accommodative with global growth continuing to be uncertain", said Rajnish Kumar, chairman, State Bank of India.

"Given the upside risks to inflation, discussed extensively, another policy rate hike can not be ruled out", he said.

Bank deposits at Rs 114.8 lakh crore grew by 0.5 percent during April 1- July 18 compared with a contraction of (-) 1.5 percent growth in the corresponding period a year ago. Nearly all (96%) of new mortgage loans are offered on a fixed rate, usually for the first two or five years. The central regulator, however, kept its stance unchanged to neutral.

It would also take the so-called Bank Rate to its highest level since 2009. The Bank has been signalling for some time that rates will need to rise to cool inflation, which surged after the Brexit vote sent the pound plunging and still remains above target, at 2.4%.

Sir Dave Ramsden, one of the Bank's deputy governors, warned savers "never" to expect banks and building societies to fully pass on rate rises.

In the third bi-monthly monetary policy statement for 2018-19, RBI said various indicators suggest that economic activity has continued to be strong.

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