Wednesday, July 23, 2008

Guess who voted for a cut?

BoE minutes show three-way split over interest rate decision

The Bank of England's Monetary Policy Committee (MPC) was divided over its decision to keep the interest rate on hold at 5 per cent in July but hinted that borrowing costs could rise next month. Minutes from the MPC's interest rate meeting in July revealed that while seven members voted to hold rates, Tim Besley opted to raise borrowing costs to 5.25 per cent while arch-dove David Blanchflower voted for a cut. The minutes also reveal that while members believed a rate rise this month may dent confidence, they did not rule out an increase in August.

Posted by little professor @ 11:44 AM (1474 views)
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13 thoughts on “Guess who voted for a cut?

  • Whatever the BOE chooses to do, it does not really filter through the economy for another 6 to 8 months anyway. Today the banks are not lending any new money and a drop in rates will not change anything.

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  • They’re still not ready to ‘pull the plug’ just yet, and inflation going through the roof, how long before there a series of raises? JUST GET ON WITH IT and help those who have savings!

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  • Vicky Redwood, UK economist at Capital Economics, said the split would bring talk of a rate rise onto the agenda. “We still think that a rate rise will be avoided. But a rate cut before November at the earliest now looks even more unlikely.”

    It was the first time the nine-strong MPC had been split three ways on the direction of interest rates since May 2006.

    I anticipate rates to remain stable during 2008 with the prospect of rises 2009 onwards

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  • Yeah Merv, GROW a PAIR ;-))

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  • Well, I’m on a tracker, but I’m not that bothered about rate rises. But that’s because when I bought I made sure that I’d be able to easily keep up payments if the base rate hit 8%, which was a bit above the 1993-present maximum. If it goes to 15% as it did in ’90/’91 I might struggle a bit, but I ought to be OK.

    5.25% is no problem.

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  • waitingfor hpc says:

    and why do i care about your mortage karellen? It is inflation that should be tackled and fast – and that will not ne held down by any figures of affordability till it is beaten.

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  • The Baldman says:

    I see there was one idiot looking for a village on the committee wanting to cut an dlet infaltion rip and the currency crash

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  • gardeniadotnet says:

    Posted this elsewhere, think it’s more relevant here….

    Dear Ray,

    Several weeks ago, on national television, Congressman Ron Paul told Fed Chief Bernanke that a staggering 4.3 TRILLION new, unbacked, paper dollars have been printed in the last two years.

    Neither Bernanke nor anyone else in the House hearing room dared to disagree. Bernanke just sat and stared.

    Now, with the dollar within a penny of its all-time lows … with that extra $4.3 trillion in new dollars still sloshing around in the economy … and with America’s money supply (M3) still growing at the staggering rate of 16.9% per year … the world is likely to be flooded with a new, even larger wave of greenbacks over the next twelve months. I’ve said it before and I’ll say it again:

    Because every new dollar Washington creates reduces the value of every dollar you earn, spend, save and invest, you don’t have to be a rocket scientist to figure out what’s next: Despite the Fed’s jawboning, and despite temporary rallies, THIS DOLLAR DISASTER HAS BARELY BEGUN!

    Where the US leads, we follow.

    Hyperinflation here we come.

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  • bidin'matime says:

    Waiting for HPC – Karellen makes a good point – I kept out of BTL because I used an assumed interest rate of 8% and, even around 2000, the returns simply weren’t good enough to make all the work worthwhile. I therefore expect prices to return to those sort of levels or below (plus a bit for rent inflation, but not too much..).

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  • need-a-crash says:

    @7. @10.

    You have both highlighted how over the past few years anyone wanting a mortgage (without financial ruin!) had to assume much higher interest rates (or lower income multiples) than banks were prepared to consider. Given average Joe simply walks into a bank and says “What’s the max I can borrow” without a thought to the debt burden he’s taking on, it’s no wonder so many people are in trouble.

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  • Karellen,

    You’re still losing around £1,500 a month on your property. That will accelerate if rates go up any further.

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  • scandinavian pessimist says:

    Paul,

    No, Karellen isn’t losing a single quid at the moment, and didn’t make any money when prices went up either. You only make or lose money on the day you sell.

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  • No You Lose When The Value Of What You Own Goes Down ….. End Of………

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