The survey of British banks showed that demand for mortgages had slowed in the first three months of 2015, compared to the same period in the previous year, but that banks expected demand to pick up in Q2. It is the latest sign that the UK’s housing market could gather some speed in 2015. However, UK banks expect lending to companies to remain flat in the second quarter, extending a flat spell in corporate lending that began a year ago. Demand for credit card lending fell in the first three months of the year, the BoE survey showed, following a record-breaking increase in the final three months of 2014. The UK’s central bank has long maligned the lack of credit being made available to businesses as a key hindrance to economic growth in the country. Banks now expect demand for credit from small businesses to jump in the second quarter, the survey showed. The Bank’s data showed that net lending to businesses increased by £440m in February, a dramatic decrease from the £1.8bn recorded in January.
The euro declined against its major rivals yesterday, as Greece nears today’s deadline for the repayment of €450 million loan to the International Monetary Fund. Greek Prime Minister Alexis Tsipras has arrived in Moscow for talks with Russian President Vladimir Putin, amid deepening uncertainty that the debt-laden country may default on its debt obligations. Greece’s negotiations with its European partners to unlock financial assistance has not been satisfactory so far. The euro reversed from an early high of 1.0468 against the Swiss currency and slipped to a 5-day low of 1.0423.
The dollar firmed this morning after the minutes of the Federal Reserve’s last policy meeting showed a split over the timing of an interest-rate increase, keeping chances of a June hike lingering. According to the minutes of the March 17-18 meeting of the Federal Open Market Committee, “several participants” thought conditions were right for a June hike in the federal funds rate, which has been stuck near zero since late 2008. Others deemed the economy would not be able to weather a rise until later in the year, while “a couple” said lift-off would remain unlikely until 2016. Differences of views within the Fed countered an earlier market conviction that a June hike was now off the table. In short, there’s a wide divergence of views within the Fed, no consensus on lift-off timing. The final arbiter will be the data, recent data argued for delayed rate lift-off. A June 18 rate increase is now being priced as quite a slim chance, analysts said.