Inflation Report
November 2006
Money and asset prices
Chart 1.1 Bank Rate and one-day forward curves(a)
Sources: Bank of England and Bloomberg.
(a) Forward rates are derived from instruments that settle on the London interbank offered rate. 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 G7 nominal interest rates(a)
Sources: Bank of Canada, Bank of England, Bank of Japan, Bloomberg, Board of Governors of the Federal Reserve System, ECB and IMF.
(a) Weighted averages of rates in Canada, France, Germany, Italy, Japan, the United Kingdom and the United States. Weights are based on nominal GDP in 2005 using market exchange rates.
(b) Implied five-year rates five years forward.
Chart 1.3 Cumulative changes in international equity prices
since 4 January 2006(a)
Source: Thomson Financial Datastream.
(a) In local currency terms.
Chart 1.4 Sterling effective exchange rates(a)
Sources: Bank of England and IMF.
(a) Monthly averages of sterling effective exchange rate indices. The real effective index is based on relative consumer prices.
Chart 1.5 House prices
Sources: Halifax, Land Registry (© Crown copyright 2006 HMLR) and Nationwide.
(a) Lagged by two months to reflect the fact that the index is based on completions whereas the lenders’ indices are based on mortgage approvals.
Chart 1.6 M4 and nominal GDP
Chart 1.7 M4 holdings by sector
(a) Other (non-bank) financial corporations.
(b) Private non-financial corporations.
Chart 1.8 Bank Rate and the effective rate on household loans(a)
(a) Monthly data to October for Bank Rate and September for the effective borrowing rate, so they do not include the impact of the increase in Bank Rate to 5% on 9 November.
(b) Weighted average of effective rates on the outstanding stock of mortgages, credit card borrowing, overdrafts and other unsecured loans.
Chart 1.9 Mortgage arrears and repossessions
Source: Council of Mortgage Lenders.
Chart 1.10 Median loan to value and loan to income ratios on
new mortgages(a)
Source: CML/BankSearch Regulated Mortgage Survey.
(a) New loans for house purchases by both first-time buyers and home movers. Changes to the methodology and sample of the survey in April 2005 mean that the figures before and after that date
are not strictly comparable.
Chart 1.11 Companies’ financial balance and lagged
investment(a)
(a) Private non-financial corporations.
(b) Investment lagged two years.
Chart 1.12 Contributions to the change in companies’ financial
balance since 1995(a)
(a) Annual data for private non-financial corporations. The data point for 2006 refers to the first half of the year.
(b) Includes net receipts of interest payments, rents, dividends and other income distributed by companies.
The distribution of debt and
repayment difficulties
Chart A The burden of unsecured debt(a)
Sources: BHPS, NMG Research and Bank calculations.
(a) Data prior to 2004 are calculated using information from the British Household Panel Survey, and are indicated by the lighter bars.
Chart B The distribution of unsecured debt
Sources: NMG Research and Bank calculations.