Morning Brief – UK Interest Rates 

Humphrey Percy
Chairman and Founder
Mon 24 Apr 2023

UK Interest Rates 

Previously expected to peak at 4.5%, UK interest rates are now (mostly) expected to peak at 5% in the summer. Worth examining what the Bank of England forecast the annual inflation rate to be in February 2022 for 1 year forward in February 2023: 5.2%.

As we know it is almost 5% above that at 10.1%. Interestingly the average economists‘ panel prediction is for inflation to average 6.5% in 2023 before falling to average 2.4% in 2024 and then slip back beneath the 2% BoE target level in 2025. Sounds cosy.

That’s because it is: too cosy. Let’s take 2023: to average 6.5% for the full year, arithmetically to achieve that level after 2 months at 10%+, the rest of the year has to average 5.8% per month. Some might conclude that the mantra of Nanny Knows Best from the worlds’ central banks is largely discredited after their slowness to react to the long running easy money conditions and their consequences. The Bank of England, it is to be hoped, is going to be different from its peers, but it is hard to see as at nearly the end of April. 

GBP/USD 1.2430.

Lord Camoys R.I.P.

On Friday afternoon colleagues, competitors, friends and family crowded into Westminster Cathedral in London to honour and remember one of the truly significant figures of UK Finance and public life of the past 50 years. I write crowded since the cathedral was packed which says just what an impact Tom Camoys or TC had on people in his 83-year life and in whose memory we were treated to a truly magnificent memorial of music, readings and tributes to the man whose financial legacy was to to have created the only surviving British global investment bank 37 years after Big Bang: Barclays Capital.

Berlin Airport

The economic titan that is Germany is today when it comes to seamless air travel within the country, grounded. All departures from Berlin have been cancelled and airports at Cologne, Dusseldorf, Hamburg and Stuttgart are also shut today due to a strike by the union Verdi over pay awards versus cost of living. EUR/USD 1.0980.

What a Wonderful World

This day in 1968, Louis Armstrong scored a Number One hit with this magnificent song. Aged 66 at the time it made him the oldest person to score a UK Number One and the song rightly so, is as poignant now as it was 55 years ago.

I see trees of green
Red roses too
I see them bloom 
For me and you
And I think to myself 
What a wonderful world

I see skies of blue 
And clouds of white
The bright blessed day
The dark sacred night
And I think to myself 
What a wonderful world

The colors of the rainbow 
So pretty in the sky
Are also on the faces 
Of people going by
I see friends shaking hands
Saying how do you do
They’re really saying
I love you

I hear babies cry
I watch them grow
They’ll learn much more 
Than I’ll ever know
And I think to myself 
What a wonderful world
Yes, I think to myself 
What a wonderful world
Ooh, yes

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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