Bank of England comes under fire for failure to reduce interest rates
November 13, 2007 by admin
Filed under News, News-Mortgages
Following its most recent decision to keep interest rates on hold for a fourth consecutive month the Bank of England has come under fire from a number of agencies for failing the economy by making the decision to keep interest rates unchanged at 5.75%.
Some say that the Bank of England is putting the stability of the UK’s economy at risk by failing to cut interest rates, and both lender and brokers had been hoping for an interest rate cut of at least 0.25% for November.
A broker from firm John Charcol stated: “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.”
A property investment official added: “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.”
One economic adviser added: “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.”
Tom Smith
13th November 2007
