Wednesday, March 28, 2007

More rates rises to come

King leaves base rate trapdoor open

Bank of England governor Mervyn King yesterday left the door wide open for another rise in UK interest rates when he and his Monetary Policy Committee colleagues testified before the Treasury Select Committee.King hammered home his view that the risks to inflation two years out remained to the "upside". He said the MPC was "concerned about" UK firms' surprisingly high confidence about pushing through price rises.

Posted by cash_buyer @ 09:57 AM (565 views)
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One thought on “More rates rises to come

  • The rate at which banks borrow from the Bank of England may even yet be irrelevant. Faced with a run, you can be sure that the banking cartel will widen their spreads (i.e. increase THEIR lending rates) without even so much as a twitch from the Old Lady of Threadneedle Street.

    You have seen it before – the BoE ups rates by 0.25%, but then the lenders increase their rates by 0.30% – 0.40%. This widening represents the extra yield they need to reap to cover bad debts.

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