Cease-fire likely

Article Abstract:

The UK chancellor, Kenneth Clarke, and the governor of the Bank of England, Eddie George, have disagreed on interest rate policy. The UK chancellor may seek to reduce rates due to a drop in average earnings growth and stagnation in manufacturing industry, while the governor may be more concerned about consumer spending levels which are recovering. Clarke is not believed to be likely to reduce interest rates and both man agree that inflation should be kept low. The other issue is whether the Bank of England should have formal independence.

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UK gilts and equities: a buyer

Article Abstract:

UK government securities (gilts) have been hit by a rise in interest rates and fears that rates will be raised further. UK share prices have not benefited from a rise in US share prices. Kleinwort Benson argues that base rates are not likely to be raised prior to an election and that inflation is not likely to be a problem in 1996. There will be short-term uncertainties related to inflation, US interest rates and UK fiscal policy, but a long sequences of UK interest rises does not appear to be likely.

Interest Rates

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