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The interest rate rise is no big deal #finance

So the Bank of England raises interest rates 1/4 of a percent. It might put an average of £12 a month on mortgages if it is passed on. Was your mortgage cut when they cut interest rates? No, probably not. Interest rates for savers were cut almost to zero and the government and Bank of England are really giving savers a bad deal. In fact, the government is hitting older people now because they seem to feel the triple lock on pensions is somehow too generous. The interest rate rise is no big deal because few people will be worse off or better off. We need interest rates to rise substantially but with the government virtually bankrupt by some measures of solvency that is unlikely to happen.

Interest rate rise - it is no big deal

No big deal

The interest rate rise was seen as no big deal by the stock market and it remained fairly steady this week. My portfolio lost a little value as some FTSE 250 shares continued to slide. There is still movement of investment to the safer FTSE 100 by the big investors.

The AIM Market

Investing in the AIM market is riskier but that is where I am seeing some growth with Immupharma doing really well and looking like breaking through the £1 a share barrier. Verona Pharma hasn’t seen any movement for a while and we await more news on the development of their new drug. I am very optimistic that both companies will do very well in the long-term.  The market makers holding shares in Solo Oil still seem to think it is risky with the spread at 10% to cover the risk but they did increase the price this week with the bid price going from 4.75 to 5. That is a substantial rise. I am expecting the price to rise a lot more than that. We have seen the share price triple on good news and the chairman said it would go to 20 by the end of the year. He didn’t say which year!

Overall, I think I will just watch the market and look for bargains but I don’t intend to trade again this year. I think the whole market is nervous because of political uncertainty. The bond market will suffer because of the interest rate rise. It will wipe billions of the balance sheets of some pension funds as bonds lose value. If we do see a few rate rises then interest in bonds could increase. We didn’t see a change in the value of the pound against the dollar this week and so I think another interest rate rise early in 2018 is likely.

That’s it for this week. If you would like to follow my blog just enter your email address at the top of the sidebar or follow me on Twitter for updates. There are also links on my Facebook page.

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