Inflation Report
February 2006
Money and asset prices
Chart 1.1
Bank of England official rate and one-day forward curves(a)
Sources: Bank of England and Bloomberg.
(a) Forward rates are interest rates expected to prevail in a future period. They are derived from instruments that settle on the London interbank offered rate (Libor). That includes market rates on short
sterling futures, swaps, interbank loans and forward rate agreements. The forward curves shown in the chart are fifteen-day averages of one-day forward rates. The curves have been adjusted for credit
risk.
Chart 1.2
The real spot curve(a)
Sources: Bank of England, Bloomberg and Debt Management Office.
(a) The spot curves shown in the chart are fifteen-day averages of spot rates at different maturities. These real rates are defined relative to the retail prices index (RPI).
Chart 1.3
The recovery in share prices
Sources: Bank of England and Bloomberg.
(a) Index: 10 April 1962 = 100.
Chart 1.4
House price inflation(a)
Sources: Bank of England, Halifax and Nationwide.
(a) Average of the Halifax and Nationwide three-month on three-month inflation rates.
Chart 1.5
Broad money(a)
(a) Defined as M4, which includes the UK private sector’s holdings of sterling notes and coin, and its holdings of sterling deposits with UK monetary financial institutions.
(b) Other financial corporations.
Chart 1.6
Effective interest rates(a) on debt, relative to August 2005
(a) Defined as the flow of interest payments divided by the stock of outstanding debt. For more details on effective rates see pages 10–13 of the May 2005 edition of the Bank of England
Monetary and Financial Statistics publication, available at www.bankofengland.co.uk/statistics/ms/2005/may/bankstats_full.pdf.
Chart 1.7
PNFCs’(a) financial balance
(a) Private non-financial corporations.
(b) In current prices at factor cost.
(c) Excluding the alignment adjustment.
Excess global
liquidity, asset prices
and inflation
Chart A
Contributions to annual growth in global broad money(a)
Sources: Bank of England and IMF World Economic Outlook September 2005 database.
(a) National data on broad money have been converted into a common currency (dollars) using market exchange rates.
Tables
Table 1.A
Housing market indicators(a)
Average (b)
since 2000
Prices
HBF house prices(c)(d)
RICS house prices(e)
RICS price expectations(e)
2005
Q1(b)
Q2(b)
Q3(b)
Oct.
Nov.
Dec.
26
16
13
-19
-37
-27
-31
-42
-22
-18
-25
-1
-17
-7
11
-8
4
21
10
8
24
Activity
HBF net reservations(c)(f)
-1
(c)(f)
HBF site visits
-7
(g)
RICS sales to stocks ratio
0.44
(d)
RICS new buyers enquiries
-4
(h)
Mortgage approvals
106
-41
-36
0.29
-4
86
-41
-32
0.28
-1
96
-7
-24
0.30
15
104
0
-13
0.31
22
112
-3
-22
0.32
14
116
6
-10
0.33
11
122
Sources: Bank of England, Home Builders Federation (HBF) and Royal Institution of Chartered Surveyors (RICS).
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
All series are net percentage balances unless otherwise stated.
These data are averages of monthly balances.
Seasonally adjusted by Bank staff.
Compared with the previous month.
Change during the past three months/expected over the next three months.
Change on a year ago.
Ratio of sales recorded during the past three months relative to the level of stocks on estate agents’ books at the end of the month.
The number of loan approvals for house purchases, in thousands.
Table 1.B
Corporate liquidity
Percentage changes on a year earlier
2005
Q1
PNFCs’(a) profits(b)
of which, non-oil companies(b)
of which, oil companies
PNFCs’(a) M4 deposits
(a) Private non-financial corporations.
(b) Excluding the alignment adjustment.
4.2
4.3
3.4
9.5
Q2
Q3
Q4
4.1
3.3
12.0
10.2
3.1
1.9
14.9
7.6
n.a.
n.a.
n.a.
11.8