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Bank of England Keeps Key Interest Rate at 5.25% Despite Inflation Falling

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Bank of England

The Bank of England maintained its main interest rate at a 16-year high of 5.25% on Thursday, despite inflation falling to its target of 2%, with several policymakers warning that a premature decrease may spark another wave of price increases.

Seven of the nine members of the bank’s ruling Monetary Policy Committee voted against a rate drop for the second week in a row, while two supported one. Interest rates have been constant since August, following a series of rises.

The statement accompanying the vote made it plain that there was disagreement on the forecast for inflation, with some expressing concern about continued significant price increases in the services sector, the key driver of the British economy.

“It’s good news that inflation has returned to our 2% target,” said Bank of England Governor Andrew Bailey, who voted to maintain current policy. “We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.”

The decision will likely dismay the ruling Conservative Party ahead of the United Kingdom’s general election in two weeks. Prime Minister Rishi Sunak would have seen a cut as good economic news, especially if it came with a drop in mortgage rates.

Upcoming UK Election

The panel maintained that the upcoming election, which the main opposition Labour Party, led by Keir Starmer, is generally expected to win, did not influence its conclusion. It stated that the decision was, as always, based on meeting the 2% inflation objective “sustainably in the medium term.”

Economists anticipate a rate decrease is on the way, either at the bank’s next policy making meeting in August or the one following in September. They expect clear evidence by then that inflation will remain close to the target for the next year or two.

“We continue to believe that the MPC will ease restrictive policy beginning in the summer and deliver two rate cuts this year,” said Sanjay Raja, Deutsche Bank’s senior U.K. economist.

The reduction in the primary inflation measure to a near three-year low of 2% in the year to May does not imply that prices are falling; rather, they are rising at a slower rate than they have in recent years during a cost-of-living crisis that has resulted in reduced living standards for millions in Britain.

Central banks worldwide dramatically increased borrowing costs from the lows seen during the coronavirus pandemic, when prices began to rise, first due to supply chain issues accumulated during the pandemic and then due to Russia’s invasion of Ukraine, which pushed up energy costs.

Bank of England unduly cautious

Higher interest rates, which cool the economy by making borrowing more expensive, have helped to reduce inflation, but they have also weighed on the British economy, which has hardly expanded since the pandemic’s recovery.

Critics of the Bank of England argue that it is unduly cautious about inflation and that keeping interest rates too high for too long will put undue strain on the economy. It is an accusation that has also been leveled at the United States Federal Reserve, which has held interest rates constant in recent months.

“Given that the U.K. has moved onto a milder inflationary trajectory, rate setters remain overly cautious about the likelihood of loosening policy, risking impeding the U.K.‘s growth prospects,” said Suren Thiru, economics director at The Institute of Chartered Accountants in England and Wales.

Some central banks, like the European Central Bank, have begun to decrease interest rates as inflationary pressures have subsided. On Thursday, the Swiss National Bank cut its main interest rate by a quarter of a percentage point to 1.25%.

Source: The Associated Press

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Geoff Thomas
Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.
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Common Pitfalls to Avoid in Future and Option Trading

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Option Trading

Options Trading involves buying and selling financial instruments such as stocks, bonds, or commodities to profit from price fluctuations. Understanding common mistakes in this area is crucial to avoid significant financial losses. Hence, seamless trading is essential for maximizing profits and minimizing risks.

Many traders fall into similar traps, leading to preventable errors that could have been avoided with the proper knowledge. This article outlines critical future and options trading pitfalls and provides strategies to prevent them. By reading this, you will be better equipped to navigate the complexities of the market and achieve tremendous trading success.

Overleveraging: A Double-Edged Sword

Overleveraging is a common pitfall that can lead to catastrophic results if the market moves against your position. However, one of the most enticing aspects of such trading is the ability to use leverage. It allows you to control a more prominent position with relatively little capital, potentially amplifying your profits.

This double-edged sword can just as quickly magnify your losses. Many traders get caught up in the allure of potential profits and forget that the same leverage that can boost gains can also wipe out an account in minutes. Setting strict leverage limits and using risk management tools like stop-loss orders can help mitigate this risk.

Ignoring Market Volatility When Trading: A Risky Oversight

Volatility measures market uncertainty, and understanding it can be the difference between profit and loss. Ignoring or underestimating market volatility is a pitfall that can lead to unexpected and often severe losses. The value of options, in particular, is susceptible to changes in volatility, making it crucial for traders to understand and anticipate market swings.

To navigate this effectively, traders should regularly monitor market conditions and use volatility indicators to inform their strategies. Adapting your trading approach to different volatility environments can help you capitalize on opportunities while minimizing risks.

Failing to Diversify: Do not Put All Your Eggs in One Basket

Diversification is fundamental in any investment strategy, yet it is often overlooked in futures and options trading. Focusing too heavily on a single asset or market can expose you to unnecessary risk.

A well-diversified portfolio significantly reduces the impact of poor-performing investments and helps maintain stability; a sudden adverse movement in one sector can lead to a substantial loss if your portfolio is not diversified.

To avoid this pitfall, ensure your trading strategy includes a variety of assets and sectors. Whether you are trading commodities, indices, or equities, spreading your investments can buffer against market volatility and enhance your overall portfolio stability.

Neglecting Continuous Education: Knowledge is Power

One of the biggest mistakes traders make is neglecting continuous education. Future and options trading is complex, and staying informed about contemporary trends, strategies, and market news is crucial for success. Ongoing learning ensures that you remain adaptable and prepared for any market conditions.

Investing time in education can significantly improve your trading performance. Attend seminars, read books, follow market analysts, and consider taking courses on advanced trading strategies. The more you know, the better equipped you will be to navigate the complexities of trading.

Seamless futures and options trading enhance financial freedom by ensuring smoother transactions, reducing risks, and maximizing profits. By mastering futures and options trade techniques, you can make informed decisions that lead to financial stability.

To achieve your financial goals, you must acknowledge and rectify the abovementioned mistakes. With the appropriate approach, you can navigate the world of trading precisely. So, stay informed and trade wisely.

 

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Geoff Thomas
Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.
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Finance

Crypto And Meme Stock Boosters Aren’t Doing ‘Trump Trades’ — They’re Just Doing Trades

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Donald Trump Vows to Fire SEC Chair and Revamp Crypto Policies if Re-Elected

Bitcoin bulls and meme stock traders are excited about the prospect of another Donald Trump presidency. Or at least the possibility of conducting some momentum trading in the next 18 days.

Here is the deal: Bitcoin, the world’s largest cryptocurrency, surged briefly to a three-month high above $68,000 on Wednesday, fueled by a combination of signals, including the former president’s statement on X that “crypto is the future” and Vice President Kamala Harris’ nod Monday to regulatory support for digital assets.

At the same time, Trump Media shares were recovering from Tuesday’s inexplicable 10% dip and resumed their meme-stock-like trend of rising without any fundamental cause to do so. The stock closed Wednesday up more than 15%.

Crypto And Meme Stock Boosters Aren’t Doing ‘Trump Trades’ — They’re Just Doing Trades

What do digital currencies and media stocks have in common?

Not much generally. However, in recent weeks, they appear to have shifted in tandem with traders’ estimates of Trump’s reelection chances.

To be clear, these traders do not have a crystal ball; they are simply wagering, with varied degrees of skill, on highly volatile assets.

Crypto traders are ecstatic at the Republican nominee’s apparent 180 on an asset class he previously branded as a fraud. Even if Tuesday’s launch of Trump-backed cryptocurrency platform World Liberty Financial revealed lukewarm interest and numerous technical issues, the former president has spent months recruiting industry billionaires and generally telling devotees what they want to hear.

That enthusiasm skyrocketed Wednesday when Trump extended his lead over Harris on Polymarket, a cryptocurrency-focused predictions website where you can wager on the election outcome. According to those investors, Trump has a 59% probability against Harris’ 41%. (This is drastically out of line with national polls, including CNN’s “Poll of Polls,” which currently show a near tie.)

“As the election approaches, voting estimates may cause market swings,” says Robinhood’s senior director of investment strategy, Steph Guild. Bitcoin may gain from Trump’s improved odds, she said, “given that he is seen as more friendly to crypto in general.”

Aside from the election prediction game, Adrian Fritz, global head of research for crypto business 21shares, tells me that bitcoin, a bellwether for the broader crypto market, is being propelled by other macro tailwinds. Not least, central banks around the world are lowering interest rates, making risky assets such as cryptocurrency more appealing. Plus, it’s #Uptober, a month when digital assets have historically performed well.

“It’s no surprise that it became way more political on both sides,” Fritz points out. “The positive aspect is that it draws attention to the entire space…” We firmly believe that, regardless of who wins, the outcome will be beneficial to the industry.

Trump Media, meanwhile, is witnessing a pre-election spike. However, it is unique in terms of turnover and swings similar to meme stocks.

According to Barron’s journalist Al Root, the equivalent of all DJT shares available for sale has changed hands multiple times in the last week, with investors hanging onto the stock for an average of only two days. For instance, Root observes that Apple shares take more than a year to fully turn over.

Crypto And Meme Stock Boosters Aren’t Doing ‘Trump Trades’ — They’re Just Doing Trades

That level of volatility makes cryptocurrency appear stable in comparison, but it attracts a certain type of iron-stomach trader looking to purchase on the rise and sell before it peaks. (Sounds simple, but your investment adviser might tell you you’d be better off going to a casino, where you could have a great cocktail and enjoy playing cards while losing money.)

Fritz thinks that momentum plays are “absolutely” happening. “This affects both consumers and professional investors. “The basis trade is one of the most popular bitcoin strategies,” he stated.

(In other words, hedge funds are leveraging up to execute complicated trades that take advantage of slight price variations between bitcoin’s spot price and futures market pricing, increasing trading volume even further.)

Bottom line: Bitcoin and Trump Media may get considerably more volatile in the coming weeks as more traders enter the market. However, if analysts or voters are looking to the market for clues as to how this presidential election will play out, keep in mind that traders will trade. While some sincere believers may be investing in supposedly pro-Trump assets, the great majority are simply working the casino floor, hoping to cover their bets and gain a few bucks.

SOURCE | AP

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Kiara Grace
Kiara Grace is a staff writer at VORNews, a reputable online publication. Her writing focuses on technology trends, particularly in the realm of consumer electronics and software. With a keen eye for detail and a knack for breaking down complex topics. Kiara delivers insightful analyses that resonate with tech enthusiasts and casual readers alike. Her articles strike a balance between in-depth coverage and accessibility, making them a go-to resource for anyone seeking to stay informed about the latest innovations shaping our digital world.
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Economist Warns Over Canada Slipping into a Cashless Society

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Canada, cash
Carlos Castiblanco, an economist, says Canada needs to protect cash. - Image Haik Kazarian

Canadian economist Carlos Castiblanco believes that Canada should follow in the footsteps of other countries and enact legislation to protect the use of cash in the country.

Castiblanco, together with the group Option Consommateurs, is urging the Trudeau government to follow the lead of other jurisdictions in the United States and Europe in enacting legislation to slow the transition to a cash-less society.

He stated that barely 10% of transactions in Canada now use cash, and that Canada must defend cash now before more merchants begin to refuse it totally.

It is vital to act now, he told CBC Radio’s Ontario Today, before businesses begin removing all of the infrastructure required to handle and manage actual cash.

“They are already used to dealing with cash, so this is the moment for the Trudeau government to act, before it is more complicated.”

A recent online poll of almost 1,500 people commissioned by a different group, Payments Canada, discovered that the majority of respondents were concerned about the potential of cashless stores and preferred to keep the ability to use cash.

Bank fees in Canada

Above all, cash has no bank fees, is not vulnerable to privacy breaches, and may be utilized during internet outages.

The Payments Canada paper, “Social policy implications for a less-cash society,” suggests legislative action, saying that cash-based transactions have decreased from 54% in 2009 to 10% by 2021.

Aftab Ahmed, one of its writers, explained who would be most affected by a cashless future in a recent piece for Policy Options, the Institute for Research on Public Policy’s online magazine.

“For many Canadians, including Indigenous people, homeless people, aging citizens, and others who are vulnerable, cash is both a beacon of economic stability and a source of financial insecurity. “Cash is an emergency lifeline and a symbol of cultural traditions,” Ahmed explained.

“Canada must avoid sleepwalking into a cashless future and instead recognize the risk of exacerbating financial exclusion of those most vulnerable.”

Refusing to accept cash

The currency issue has already caught fire outside of Canada, according to Castiblanco, with some US states and territories beginning to pass legislation to preserve access to cash.

In 2019, Philadelphia became the first city in North America to prohibit “any person selling or offering for sale consumer goods or services at retail from refusing to accept cash as a form of payment.”

Other U.S. cities, including New York, Seattle, and Los Angeles, have since taken action on the issue.

In New York, the policy recommends fines of up to $1,500, with the Councillor who proposed the guidelines claiming that prohibiting cashless transactions preserves privacy, equity, and consumer choice.

European countries such as Norway, Spain, and Ireland have enacted similar legislation. In Ireland, the rule would mandate cash transactions at companies like as pharmacies and grocery stores that supply basic goods and services.

Source: CBC

 

author avatar
Geoff Thomas
Geoffrey Thomas is a seasoned staff writer at VORNews, a reputable online publication. With his sharp writing skills and deep understanding of SEO, he consistently delivers high-quality, engaging content that resonates with readers. Thomas' articles are well-researched, informative, and written in a clear, concise style that keeps audiences hooked. His ability to craft compelling narratives while seamlessly incorporating relevant keywords has made him a valuable asset to the VORNews team.
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