Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (59185)	5/10/2024 11:29:11 AM
From: Johnny Canuck	Read Replies (2) \| Respond to of 69062

ECONOMY Traders reassess Bank of England rate cuts as UK grows at fastest rate in nearly 3 years PUBLISHED FRI, MAY 10 20247:48 AM EDTUPDATED 2 MIN AGO Sophie Kiderlin @IN/SOPHIE-KIDERLIN-B327B914A/ @SKIDERLIN SHAREShare Article via FacebookShare Article via TwitterShare Article via LinkedInShare Article via Email KEY POINTS Economists at Swiss bank UBS were among those who shifted their view on when the BOE may cut interest rates, saying they were now expecting the first rate cut to take place in June rather than August. The BOE’s interest rate decision was followed Friday by the latest U.K. gross domestic product data, which showed that the U.K. economy grew by more than expected in the first quarter of 2024. GDP increased by 0.6% compared with the 0.4% estimate, marking the first quarter since the end of 2021 in with GDP growth exceeded 0.5%. Bank of England Governor Andrew Bailey attends the central bank’s Monetary Policy Report press conference at the Bank of England, in London, on May 9, 2024. The Bank of England on Thursday kept its main interest rate at a 16-year high, but hinted at a cut over the summer as UK inflation cools further and the country looks set to exit recession. (Photo by Yui Mok / POOL / AFP) (Photo by YUI MOK/POOL/AFP via Getty Images) Yui Mok \| Afp \| Getty Images LONDON — A slew of commentary from the Bank of England and a better-than-expected economic growth number have left traders and investors scrambling to refine their bets on when the U.K. central bank will start to cut its benchmark rate. Investors had been eagerly awaiting any indicators in the hope that they would provide hints about when cuts may begin. The BOE’s benchmark rate helps price all sorts of loans and mortgages in the country and has risen rapidly over recent years to help tame high inflation. Markets on Friday were pricing in an around 48% chance of a rate reduction in June according to LSEG data, slightly higher than Thursday’s 45% probability. Economists at Swiss bank UBS were among those who shifted their view on when the BOE may lower interest rates, saying they were now expecting the first rate cut to take place in June rather than August. “The broader message and the tone of the MPC were more dovish than we had anticipated,” they said in a note published after the BOE’s latest interest rate decision. The central bank on Thursday said it would leave interest rates unchanged for now, and stressed that a June rate cut was in no way guaranteed. Two members of the Monetary Policy Committee voted to reduce rates, one more than at the BOE’s previous meeting. WATCH NOW VIDEO07:01 Bank of England’s Andrew Bailey says cutting rates just before a UK election wouldn’t be an issue “June is not a fait accompli, but each meeting is a new decision,” BOE Governor Andrew Bailey said in a post-meeting news conference. UBS cited changes to the BOE’s forward guidance, inflation expectations and comments from Bailey regarding the impact of increased national living wages on overall wage growth as reasons for its changed expectations. The Swiss bank now expects rates to be cut in June, August and November, it said, by 25 basis points each. WATCH NOW VIDEO04:29 UK homebuilders may see the biggest boost from rate cuts, strategist says The BOE’s interest rate decision was followed Friday by the latest U.K. gross domestic product data, which showed that the country’s economy grew by more than expected in the first quarter of 2024. GDP increased by 0.6% compared with the 0.4% estimate, marking the first quarter since the end of 2021 in with GDP growth exceeded 0.5%. The economy thereby exited the technical recession it had entered after two consecutive quarters of contraction in the second half of last year. “This is undeniably a strong number and suggests the U.K. economy is shaking off its woes from 2023,” Nomura analysts said in a note published Friday. This could suggest that inflationary pressures are persistent and the economy is more resilient to higher interest rates, they noted. The BOE on Thursday warned that indicators of persistent inflation “remain elevated,” but also said it was anticipating inflation to close in on the 2% target in the near term. “This [GDP] release further strengthens our view that the Bank of England will need to keep policy restrictive for longer than markets are pricing to bear down on inflation,” Nomura analysts said, adding they expected the central bank to wait until August before cutting rates. Get more from CNBC. Breaking news and updates on Telegram.