Inflation Report February 2012

1. Inflation Report February 2012 Money and asset prices

2. Chart 1.1 Bank Rate and forward market interest rates(a) Sources: Bank of England and Bloomberg. (a) The November 2011 and February 2012 curves are estimated using overnight index swap (OIS) rates in the fifteen working days to 9 November 2011 and 8 February 2012 respectively.

3. Chart 1.2 Quarterly changes in gilt holdings by sector(a) Sources: Bank of England and Debt Management Office. (a) Non seasonally adjusted. (b) Changes in the Bank of England’s sterling holdings of all securities issued by the public sector. (c) Net issuance by the Debt Management Office.

4. Chart 1.3 Selected European ten-year spot government bond yields(a) Source: Bloomberg. (a) Yields to maturity on ten-year benchmark government bonds, unless otherwise stated. (b) Yield to maturity on the nine-year benchmark government bond from 12 October 2011 onwards.

5. Chart 1.4 UK five-year and ten-year nominal spot gilt yields and five-year yields, five years forward(a) Sources: Bloomberg and Bank calculations. (a) Zero-coupon yield. (b) Derived from the Bank’s government liability curves.

6. Chart 1.5 UK gilt yields relative to yields on German and US government debt(a) Sources: Bloomberg and Bank calculations. (a) Spread between ten-year spot zero-coupon yields.

7. Chart 1.6 International equity prices(a) Source: Thomson Reuters Datastream. (a) In local currency terms.

8. Chart 1.7 Cumulative net corporate bond issuance by PNFCs over calendar years(a) (a) Monthly net issuance of sterling and foreign currency stand-alone and programme bonds. Data are non seasonally adjusted.

9. Chart 1.8 International nominal effective exchange rates

10. Chart 1.9 Public term issuance by the major UK lenders(a) Sources: Bank of England, Dealogic and Bank calculations. (a) Data are as at 8 February 2012. Data are shown at a quarterly frequency, the final observation is 2011 Q4. Includes debt issued by Banco Santander, Bank of Ireland, Barclays, Co-operative Financial Services, HSBC, Lloyds Banking Group, National Australia Bank, Nationwide, Northern Rock and Royal Bank of Scotland. Term issuance refers here to securities with an original contractual maturity or earliest call date of at least 18 months. (b) Comprises medium-term notes, subordinated debt, unguaranteed senior debt and guaranteed senior debt issued under HM Treasury’s Credit Guarantee Scheme. (c) Comprises covered bonds, CMBS, RMBS and other ABS.

11. Chart 1.10 UK banks’ indicative longer-term funding spreads Sources: Bank of England, JPMorgan Chase & Co., Markit Group Limited and Bank calculations. (a) The data show a simple average of the five-year CDS premia of Barclays, HSBC, Lloyds Banking Group, Nationwide, Royal Bank of Scotland and Santander UK. (b) From January 2012 onwards, the data show a weighted average of the spread between covered bonds of any maturity issued by UK banks and equivalent-maturity swap rates, weighted by the outstanding value of each bond. Before January 2012, the data show a simple average and include bonds with a maturity of between three and five years only.

12. Chart 1.11 Loans to euro-area credit institutions by the ECB and euro-area countries’ national central banks(a) Source: ECB. (a) Includes loans extended through: main refinancing operations; longer-term refinancing operations; fine-tuning reverse operations; structural reverse operations; the marginal lending facility; and credits related to margin calls.

13. Chart 1.12 Loans to individuals and PNFCs (a) Sterling and foreign currency loans. (b) Sterling loans.

14. Chart 1.13 PNFCs’ net external finance raised(a) (a) Includes sterling and foreign currency funds. (b) Non seasonally adjusted. (c) Includes stand-alone and programme bonds. (d) As component series are not all seasonally adjusted, the total may not equal the sum of its components.

15. Chart 1.14 Credit Conditions Survey: spreads on corporate loans by company size(a) (a) Weighted responses of lenders. A positive balance indicates that spreads over reference rates had risen and a negative balance indicates spreads had fallen over the past three months. The diamonds show lenders’ expectations for the next three months, reported in the 2011 Q4 survey. (b) Data are only available from 2009 Q4.

16. Chart 1.15 Bank Rate and average quoted interest rates on new household borrowing(a) (a) Sterling-only end-month average quoted rates. The Bank’s quoted interest rates series are weighted averages of rates from a sample of banks and building societies with products meeting the specific criteria (see http://www.bankofengland.co.uk/mfsd/iadb/notesiadb/household_int.htm). Data are non seasonally adjusted. (b) Quoted interest rate on a £10,000 personal loan. (c) Two-year fixed-rate mortgage. (d) Series is only available on a consistent basis back to May 2008, and is not published for March to May 2009 as fewer than three products were offered in that period. (e) On mortgages with a loan to value ratio of 75%.

17. Tables

18. Table 1.A Broad money(a) (a) M4 growth excluding intermediate OFCs. Intermediate OFCs are: mortgage and housing credit corporations; non-bank credit grantors; bank holding companies; securitisation special purpose vehicles; and other activities auxiliary to financial intermediation. In addition to the deposits of these five types of OFCs, sterling deposits arising from transactions between banks or building societies and ‘other financial intermediaries’ belonging to the same financial group are excluded from this measure of broad money. (b) Averages of quarterly data.

19. Table 1.B Housing market indicators • Sources: Bank of England, Department for Communities and Local Government, Halifax, HM Revenue and Customs, Land Registry, Nationwide, Royal Institution of Chartered Surveyors (RICS) and Bank calculations. • (a) Averages of monthly data. • Except for property transactions, which is an average since April 2005. • Number of residential property transactions with value £40,000 or above. • (d) Loan approvals for house purchase. • (e) Ratio of sales recorded over the past three months to the level of stock on estate agents’ books at the end of the month. • (f) Percentage changes. • (g) 2011 Q4 estimate is an average of data for October and November. • (h) Data relate to England and Wales only.