The UK Monetary Policy Committee (MPC) voted to hold current bank rates at 0.5 percent, the minutes show that no member of the MPC voted in support of interest rates increase and so is the vote for the decrease in rates. All the MPC voted to hold the current rate.
The MPC members have said the policy decision for this month was clear cut. Although, a few members of policymakers think the risks of inflation rising above the bank’s 2 percent target was rising, the reason they attributed to Greece’s debt standoff that has crippled the whole Europe region in months.
The minutes showed that most members of the MPC think the decision to keep the bank rate at the current percentage would still have been appropriate even without China’s financial volatility and Greece crisis. Market traders believe BoE is maintaining this current rate because the economy cannot sustain itself at a rate above 0.5.
An MPC member, David Miles said “holding off on bank rate hike for too long could be a bad mistake”.
But raising rates means cutting loans since financial institutions won’t want to take loans at a higher rate like they are currently doing, which means jobs would be drastically affected and the wages would drop. This is similar to what US FED, Yellen said that they have to see substantial improvement in the economy before rate hike decision can be considered.
BoE seems to be implementing similar measure to be sure the economy can sustain itself if there is a rate hike, which is good to ensure job growth continue and the unemployment rate continues to reduce.
Italy Retail Sales
Retail sales dropped from 0.7 percent last month to minus 1 percent, this shows that people have not been purchasing at the retail level compared to the previous month. This is the major gauge of consumer spending which accounts for economic activities. It usually has little or no effect on the single Eur currency considering the size of the Italian economy in the region.
Apple Shares
Apple shares have lost $60 billion since the release of its third-quarter earnings. The company failed to meet the target on its key product, iPhone, sales came in at 47.5 million units while the expected target was 48.8 million. The company made its highest fiscal profit ever, though it failed to help the company’s falling shares.
This is due to the fact that the iPhone is Apple mean product and any sign of decline in sales would impact overall company performance. Several analysts interviewed by Bloomberg have said Apple is financially well-positioned, that this is expected because of its position in the market. It set the pace and was judged by it.
Tim Cook, Apple CEO defends the company report, he said sales of Apple wristwatch exceed expectations and the growth is good enough going by the global economic situation.
