Nick Batsford, CEO of Tip TV, was joined by Keith Bowman, Equity Analyst for Hargreaves Lansdown, when he opened the Tip TV Finance Show to discuss the contrasting markets, interest rates and the BoE and UK economy.
Contrasting Markets following Fed hike
Bowman noted that after the Fed finally raised rates on Wednesday, which the market reacted to well, there is now contrast in the markets as oil is flirting with a 7 year low and we are seeing more worries from China following the release of the ‘Beige Book’.
BoE lift-off in Feb 2017?
Batsford highlighted FX Street, who outlined that the Sterling Overnight Index Average shows that traders are fully pricing in a 25 basis point hike from the Bank of England in Feb 2017. They added that history shows that Fed tightening is often followed by a UK rate hike within a quarter or so of the Fed move, but this time the BoE could be a year behind. Bowman agreed with this, and continued that this year coming will be interesting for the Bank of England. Bowman commented that the UK economy is not doing too badly, but we seem to be caught in the middle of the US and the Eurozone.
2015 rate movements
Batsford drew attention to all rate hikes and cuts over the course of 2015, including a variety of central banks. Particular interest was on the Federal Reserve who hiked by 25 bps on Wednesday this week, whilst the PBoC was also highlighted as cutting rates by 25 bps on 5 occasions in February, May, June, August and October.
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