South Yorkshire mortgages set to rise following interest rate hike

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The Bank had backed away from a rate rise earlier this year after growth slowed down sharply to 0.2 per cent in the first quarter, but said the economy had recovered as predicted.

In a public lecture in March, RBI governor had emphasised on the need for banking regulatory powers that are neutral to bank ownership, to provide a level playing field between public sector and private sector banks.

"Make sure you keep an eye on which banks are offering the best interest rates as not all of their products will increase by the BoE's 25 basic points".

Indonesia's central bank has been the most aggressive in Asia this year, hiking its benchmark rate 100 basis points between mid-May and the end of June.

Retail inflation in India touched the 5 per cent mark in June, compared to 4.87 per cent in May and has gone beyond the RBI's revised inflation projection of 4.8-4.9 per cent for the first half of the current fiscal.

The monetary policy committee (MPC) kept its stance neutral, aiming to contain inflation at 4% within a 2% band, thus making future rate hikes possible. RBI expects the inflation rate to gradually go up to 5 per cent by the first half of 2019-20, which will be an election year.

Sterling has lost nearly 10 percent of its value since hitting a post Brexit-referendum high in April, amid worries that Britain will fail to secure a trade deal before it exits the European Union in March.

However, it's ultimately up to the banks about how much their want to increase this.

Five of the six members on the panel voted for a rate increase in the latest policy review.

The Central Government has auctioned Cash Management Bills (CMBs) amounting to Rs 65,000 crores since the last monetary policy ( i.e. after June 6, 2018), indicative of liquidity pressures. "The trade skirmishes evolved into tariff wars and now we are possibly at the beginning of currency wars".

All bets on where BoE rates are headed will be off, however, if Britain fails to get a Brexit deal, Carney has said.

"For example, those paying off the UK's average mortgage debt, with a variable rate mortgage face paying an extra £17-£18 per month, which adds up to an extra £200 per year or more than £6,000 over the life a 30-year loan term".

The BoE has been preparing the market for a rate rise during 2018. In its last revision, August 2, 2017, rates were cut by 25 basis points to 6 per cent.

Similarly, the BoE's new inflation forecasts will be watched as a sign of whether it thinks investors are being too relaxed by betting on no follow-up rate hike until late 2019 and only one more nearly at the end of its three-year forecast period.

He said "limited" and "gradual" increases were required to bring inflation down to its 2 per cent target now that the United Kingdom economic growth appeared to be picking up again. He added that this would now obviate the chances of another hike in October.

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