Inflation Report August 2016 A monetary policy package to support the UK economy

Chart A Less pass-through of risk-free rates when interest rates are lower Level of retail deposit rates and pass-through of lower risk-free rates (a) (a) Effective household deposit rate on new business, unless otherwise stated, and change between 2013 Q4 and the three months to May 2016 as a percentage of the change in the corresponding maturity of swap rate. (b)Includes interest rates for overnight deposits, and deposits with a maturity of less than one year, between one and two years and greater than two years. (c)Data are for the three months to June (d) Outstanding interest rates for deposits with a maturity of less than three months, between three months and one year, between one and two years and greater than two years. (e)Published rates for new sight deposits, and on two and three-year cash bonds. (f) Percentage of pass-through is that implied by bivariate regression on the data for other European countries shown in this chart.

Chart B Half of mortgages by value are floating-rate contracts Distribution of mortgage lending (a)(b) (a)Average daily balances on sterling household loans and deposits reported on Form ER (effective rates). Data are non seasonally adjusted. Data from January 2016 are comprised of individuals and individual trusts only. For more information, see the article ‘Developments in Effective Rates Statistics’ in the December 2015 edition of Bankstats. (b)More granular breakdowns are included from the earliest point at which the data were collected. (c)Standard variable rate. (d)The shares of capped and uncapped standard variable rates (SVRs) within total SVR are Bank staff estimates over the period. The estimated data are not calculated monthly and have been linearly interpolated to produce a monthly series.

Chart C TFS fees rise as bank lending falls TFS fee schedule

Chart D Yield curves are low in many advanced economies Nominal yield curves derived from government bonds (a) Sources: Bloomberg and Bank calculations. (a)Zero-coupon spot rates derived from government bond prices. Averages for the fifteen working days to 27 July.

Table 1 Stock of gilts available for purchase (a)Measured in market value as at 27 July Stock of gilts available for purchase up to 70% of the outstanding free float (amount in issue minus government holdings), excludes index-linked gilts.

Chart E Liquidity premia fell back in 2009 Decomposition of sterling investment-grade corporate bond spreads (a) Sources: Bloomberg, Merrill Lynch, Thomson Reuters Datastream and Bank calculations. (a)See Webber, L and Churm, R (2007), ‘Decomposing corporate bond spreads’, Bank of England Quarterly Bulletin, Vol. 47, No. 4, pages 533–41; Option-adjusted spreads over government bond yields.

Chart F Corporate bonds are issued by companies across a range of sectors Distribution of sterling-denominated investment-grade corporate bonds (a)(b) Sources: Bloomberg, Dealogic and Bank calculations. (a)May not sum to 100% due to rounding. (b)The stock of UK-incorporated sterling investment-grade bonds, excluding those issued by banks and insurers. Market value as at 2 August Stock based on Dealogic data. Market values and sector classifications based on Bloomberg and Bank staff calculations. (b)Includes issuers in the property and real estate sectors and excludes insurers.