Up to date financial situation in UK
After a big pause which lasted quite a long time when the borrowing costs were much lower than looking for, the Bank of England anticipates howling success of borrowing costs this year in May.
The MPC (Monetary Policy Committee) several days ago has said they are going to hold sway with 0,5 % growth of loan charge, but still there can’t be denied the fact that this year at least once an upsurge is anticipated. These days we can observe a drop in inflation, placing 2% results against 2, 7 % in January. Now it can be said that the situation is more or less stable. Wage hikes, clarity in the Brexit process. Such changes give an opportunity to bring UK’s interest rates above the crises, so there is a hope that it can be the first return to the positive marks since the global recession. Other positive news? The changes herald the involvement of investors into the rocky Brexit process. Besides, recently there have been observed strengthening of national currency, plus the involvement of investors into the process promises to cause the growth of borrowing costs.
All in all, the current situation looks like in the following way: national currency has become more or less stable, but returning back to the inflation, it is still high, in other words it’s time for BOE to act, to stabilize the situation.
Interest rates to hold steady
There has been a vote in which 9 members of Bank of England participated, 7 of them voted for holding interest rates steady, and 2 of them were for 0,25 % increase.
Finally on March 21, 2018 there was made a decision to maintain the rate at 0, 5 % but several minutes before the final decision was in favor of 0,75%.
No doubt, any positive changes in Brexit diplomacy could have an impact on the Pound and GBP/EUR. Pound to South African Rand Exchange Rate Forecast: Risk of GBP/ZAR Exchange Rate Slump on GDP SlowdownThe Pound could make more noticeable losses against the South African Rand in the week ahead, when finalised UK GDP growth rate data for Q4 2017 will be released.
BOE’s attitude to cryptocurrency
Moving further, the chief of Bank of England said that he doesn’t see anything bad in cryptocurrency for the normal functioning and development of the world’s economy. Also he stated that the currency has lost its position as a leader, in the majority of cases the prices of some cryptocurrencies “have exhibited the classic hallmarks of bubbles”. He also added that the absence of risk can be explained by the fact that cryptocurrency is relative small comparing it with the entire financial world.
Even if there would be such kind of possibility, the total value of cryptocurrency won’t be more than 1%. Compare the following information: previously to the global financial instability “the notional value of credit default swaps was 100% of global GDP.”
Of cause, Mark Carney, Bank of England chief, is not the only figure in the global sense of financial world, there are other figures that are not so optimistic (for instance China and Japan) and they are trying to avert money laundering of fiat and crypto assets from their countries.