Indian interest rate hike unlikely to affect NRIs

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He said the final Brexit deal was "potentially the most important" factor that would influence monetary policy in the coming months and years, and added that the Bank was ready for all outcomes.

The pound extended losses on Thursday after the Bank of England raised interest rates from crisis era lows but was cautious about any further tightening with an uncertain Brexit on the horizon.

National president of Confederation of Real Estate Developers Associations of India'(CREDA) Jaxay Shah, who was also part of the meeting, said, "Two consecutive hikes in the repo rate partially undo the policies for promoting affordable housing. We do feel the balances of risks are for further political turbulence between now and October".

Members of the nine-strong Monetary Policy Committee (MPC) voted unanimously to raise the base rate from 0.5 per cent to 0.75 per cent.

The repo rates are also hiked to contain inflation in the country.

The Scottish Fiscal Commission, which determines the spending envelope for the Scottish Government, has forecast Scotland's GDP growth will stay below 1 per cent for five years.

The BoE predicted that inflation would be 0.1 percentage points higher this year and next at 2.5% and 2.2% respectively. And the "new normal" was half that, at 2-3% once inflation is included.

Above: The initial reaction by Sterling was to shoot higher, but a sudden change in heart by the market left it nursing losses.

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However, the BoE continued to stress that Britain's economy was at risk of too much inflation even with its slow growth. However, if companies pass on the recent GST rate cuts, some of the impact of inflation will get moderated.

A sustained rise in interest rates is bad for corporates.

The BoE said Britain's economy, while growing more slowly than in the past ahead of Brexit, was operating at nearly its "speed limit", or full capacity, raising the prospect of more home-grown inflation pressure ahead.

But publicly discussing such a scenario - despite making clear it was not a prediction of what happens after no deal - will renew claims Mr Carney is taking part in "project fear" and trying to scare voters away from backing Brexit. "However, a relatively more hawkish BoE may curb some of the potential downside GBP risks and we still remain medium-term bulls, looking for GBP/USD at 1.38-1.40 and EUR/GBP at 0.85-0.86 in 1Q19", says Patel.

"No one thought that historically low interest rates would carry on for ever, but plenty of homeowners would probably admit they haven't planned ahead for rate rises".

The BoE said Britain's economy, while growing more slowly than in the past ahead of Brexit, was operating at nearly its "speed limit", or full capacity, raising the prospect of more home-grown inflation pressure ahead.

"Equity markets will take the rate hike in stride pending additional data; generally, it takes at least three hikes in a rate-hike cycle for the impacts to start to be felt by consumers and businesses", points out Sunil Sharma, chief investment officer, Sanctum Wealth Management.

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