Bank slammed for keeping base rate at 5.75%
The Bank of England monetary policy committee has come under fire for putting the economic stability of the UK at risk by voting against a cut.
Lenders and brokers had hoped that the committee would opt for a 25 basis point cut to ease the current tension between the base rate and three-month Libor which stands at 6.3%.
Ray Boulger senior technical manager of brokerage John Charcol said: “A cut of 0.25% today would at least have pushed three-month Libor back down to about 6%. It would also have started to redress the Bank of England’s policy mistakes, as outlined in last month’s Financial Stability Report, in dealing with the credit crunch.These are all good reasons why the MPC should have cut today. Their failure to do so means that today’s opportunity to mitigate the potentially serious problems building up in the banking system has been lost.”
While Stuart Law, chief executive of property investment company Assetz said: “It's about time that the Bank of England’s MPC saw sense and realised that the clear and present danger to the UK economy from the continuing effects of the credit crunch is more important than the less clear possibility of future pressures upwards on inflation.”
The British Chambers of Commerce said that suppressed domestic inflationary pressures should have meant the committee was in a position to cut the rate.
Economic advisor, David Kern said: “Credit conditions have become tighter since August, both globally and in the UK. The dangers to the economy have worsened and businesses require easier credit conditions without undue delay, to avoid a nasty reversal. We urge the MPC to announce a small interest rate cut in December.”
However, Lloyds TSB Corporate Markets chief economist, Trevor Williams said the MPC was right to keep the rate on hold.
“Although it is true that economic growth may have peaked in the last quarter and is slowing in the current one, there is still some way to go before the MPC would need to wield the knife on base rates. And with money supply still growing, strong labour market conditions and continuing robust economic growth, today was clearly not the day for a cut. The next move will almost certainly be down, but it’s safe to say there won’t be any change until February at the earliest,” he said.
Ref:
http://www.ncfonline.co.uk/newsarticle.asp?id=4753
FREE ADVICE IS THE BEST ADVICE
LEYBRIDGE LIMITED
Mortgage Broker & Mortgage packager
Specialising in adverse credit.
Firm FSA No:313790
Personal FSA No:MJB01557
see feedback and testimonials at:
http://www.leybridge.com/testimonial.php
Check out my blog at:
http://mikebdomain.blogs.iva.co.uk/
Please read our Initial Disclosure Document(IDD):
http://www.leybridge.com/Leybridge-IDD.pdf
