welcome to money distilled i’m john stepek every week day i look at the biggest stories in markets and economics and explain what it all means for your money the bank of england is up against it again ok so much for my “dovish hike” idea in an ideal world the bank of england would be able to stall until it’s seen the uk’s july inflation figure which comes out in august before deciding on just how much further to raise interest rates that’s because july is when the next energy price cap distortion falls out of the “headline” figure and so we’ll have a much clearer view of just how much worse uk inflation is than its peer group problem is the bank has very little if any credibility left it needed a win on today’s inflation figures it didn’t even get a noscore draw inflation for may came in stronger than expected with the headline rate of 87 matching the april reading and ahead of the 84 estimate from a survey of economists by bloomberg but the real nasty was “core” cpi the consumer price index excluding volatile components like food and fuel in april that came in at 68 well above expectations for may it was expected to stay at 68 but it in fact came out at 71 in other words it’s not even going in the right direction as the chart below shows headline inflation rate is in white core is in light blue wages are the purple line and the bank of england rate is the darker blue line you can read the grisly details here but what does it all mean for your money what it means for mortgages a rate hike tomorrow is pretty much set in stone now and the only question is whether it’ll be a quarter point rise or a halfpoint one either way with market expectations continuing to climb don’t expect to see any relief on mortgage rates any time soon marcus has some wise words here for anyone who has to refinance in the coming year but long story short if your renewal is coming up in the next six months which according to trade body uk finance covers about 800000 of you then start talking to a broker and get your paperwork in order in turn rising mortgage rates spell more trouble for house prices as long as the labour market remains solid we shouldn’t see a major rise in repossessions or forced sales though buytolet could remain fragile on that front but you don’t need forced sales or spiking unemployment to see lower house prices transactions will stall because people simply can’t afford to pay asking prices but at least some homeowners will have to move and as prices are set on the margins you can expect the properties that do sell to sell for less on average the ongoing slump in transactions also spells bad news for the entire residential property sector you need only look at what’s happened to the share prices of the housebuilders in the past month ie since rate expectations flipped to see that the ftse 350 housebuilder sector as a whole is down more than 12 since may 23rd which is the day before the april inflation reading hit that in turn could feed into the wider economy although the scale probably depends on how badly construction jobs are hit what it means for savings rising rates don’t act in just one direction of course this is good news for savers with rates climbing and inflation off its peak your savings are losing less and less in real terms ie after inflation than they have been for some time give it a few more months and it’s possible that we might even see real returns on savings if you haven’t already looked at switching your savings from wherever they’re currently stashed then you really should do so given that even easy access accounts are offering more than 4 now you might want to maintain your flexibility for now in terms of locking in rates as it’s possible they’ll go higher from here though if you see a particularly appealing rate you could lock up a portion of your money and keep the rest on a more flexible basis also if you’ve been neglecting cash isas because the tax benefits didn’t amount to much during the 0 rate era it’s time to look at that decision again with interest rates going up and income tax thresholds frozen you don’t need anywhere near as big a pot of savings to risk generating enough interest for tax to be charged so look at the tax shelter option again one thing i’d emphasise amid all of this in case you hadn’t grasped this already is that market expectations can flip on their heads in a very short space of time the clearest recent example of this is the fact that prior to the april inflation reading coming out in may markets expected the bank of england to stop raising interest rates at 475 now as a result of today’s inflation figures they expect a hike to 5 tomorrow that shows you just how important one piece of data can be so just because they now expect interest rates to peak at 6 doesnt mean that will actually happen all it might take for markets to reassess again is for the inflation rate to undershoot expectations at some point in the coming months or for employment to wobble or any other sign of cooling for example one glimmer of hope is that producer price inflation that is the measure of prices coming further down the line actually surprised to the downside this morning costs for producers fell between april and may and input costs for example are rising by just 05 year on year all of that said the bank is now under massive political the government wants inflation down and intellectual it will hate being made to look stupid pressure to “do something” and given that we now have to wait until august before we get the one bit of data with the greatest potential to change the narrative that is the inflation data for july it’s likely to be a long and fractious summer economically speaking send any feedback opinions or questions to jstepek2bloombergnet and i’ll print the best if you were forwarded this email by a friend or colleague subscribe here to get your own copy what i’ve been reading this morning   with excellent timing my colleague neil callanan sat down with a panel of housing experts yesterday here’s the transcript of his chat with bloomberg economist niraj shah gráinne gilmore from estate agency cluttons and neal hudson of builtplace all giving their insight into the uk housing market   would you want your employer to provide a house with the job its happening in america as erin lowry reports   the nickel market broke down last year here’s the full story of what happened looking at wider markets the ftse 100 is down about 02 at around 7550 gold is a little lower at around 1935 an ounce and oil as measured by brent crude is flat at 7590 a barrel the pound has lost ground against the us dollar falling 03 to 1272 follow uk markets today for uptotheminute news and analysis that move markets quote of the day don’t miss the daily newsletter from the bloomberg businessweek team sign up for bw daily for original reporting and unique perspectives from the magazine’s renowned journalists every weekday the main stories to watch out for on thursday include   in the uk companies reporting include leisure group whitbread which owns the premier inn hotel chain among other brands don’t miss the in the city podcast every week bloomberg’s francine lacqua and david merritt go behind the scenes in the square mile and if you want uptotheminute news commentary with the odd joke flung in follow me on twitter