Markets predict 6pc interest rate after inflation shock

Mortgage holders were hit after underlying inflation rose last month, putting pressure on the Bank of England to raise interest rates further.

The CPI was unchanged at 8.7 percent in May, but the all-important core inflation number being watched by policymakers came in at 7.1 percent, ahead of market expectations.

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1) Downing Street rejects Gove’s call for long-term mortgage deals | The government says it’s up to lenders to decide on products as interest rates rise

2) Why a 25-year term is not a panacea for the mortgage crisis | Gove’s proposal would likely result in higher costs and require fundamental market reform

3) Mortgage bailout calls prove Covid has got us addicted to welfare | Panicked calls to plunder the Treasury ignore the real crisis in Britain

4) Starmer must drop support for £20billion flagship nuclear power plant, says former adviser to Gordon Brown | Nick Butler urged the Labor leader to support the use of British nuclear technology instead

5) “New Concorde” is approaching its maiden flight after the contract round | Boom jets could cut travel time between London and New York to under four hours

What happened overnight?

Asian stocks struggled on Wednesday as a lack of fresh stimulus measures from Beijing frustrated investors, who also wondered how hawkish the world’s most powerful central banker would be later in the meeting.

Federal Reserve Chairman Jerome Powell, who will deliver his mid-year report to Congress later in the two-day hearing, will no doubt be asked whether interest rates will actually pick up again in July, peaking at 5.5 to 5.75 percent as forecast become.

MSCI’s largest index of Asia-Pacific stocks outside of Japan fell 0.8 percentage points, South Korea lost 0.6 percentage points.

Japan’s Nikkei rose 0.7 percent as the market consolidated three months of strong gains. A survey showed that sentiment among major Japanese manufacturers firmed in June, remaining in positive territory for the second straight month.

Chinese blue-chip stocks slipped 0.6 percent as investors were still disappointed by the magnitude of Tuesday’s rate cuts, which also sent the yuan hitting a year-low.

Wall Street shares fell Tuesday in their first day of trading after a US bank holiday.

All three major US stock indices ended the session lower on signs of weakening global demand.

The Dow Jones Industrial Average lost 0.7 percent to 34,054.07. The broad-based S&P 500 fell 0.5 percent to 4,388.73, while the tech-rich Nasdaq Composite Index fell 0.2 percent to 13,667.29.


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