No move for base interest rate

The Bank of England has announced that the base interest rate in the UK is to be kept on hold once again, which means that this will be the eighteenth month in a row that the base rate will have been kept at the record low of just 0.5 percent. The announcement came after the August Monetary Policy Committee meeting.

The decision to keep the base rate at 0.5 percent, which is the lowest in the history of the Bank of England, has sparked speculation that the Monetary Policy Committee is not all that concerned about rising inflation, which at present is much higher than the government target of 2 percent but is expected to fall closer to its targets level over the course of the year.

The central bank also said that the quantitative easing programme was still on hold. The programme was started by the former Labour government, and so far £200 billion has been pumped into the economy through this scheme. The MPC has now said that whilst the scheme will be kept on hold for now there is still scope to use it again in the future should it be necessary.

In the meantime many industry groups have welcomed the decision for the bank base rate to be kept on hold, with officials stating that this could help to revive the economy. The British Chambers of Commerce said that the cuts that the coalition government had made to address the public deficit would impact on the economy, so keep the base rate on hold had been a necessity.

David Kern from the BCC said: “The MPC made the right decision. The tough deficit-reduction measures announced in the Budget, although necessary, will inevitably increase the threat of a UK economic setback. Given the precarious economic background, it is absolutely vital that the MPC maintains the current low level of interest rates until the second quarter of 2011 at the earliest.”

Tags: Monetary policy, bank base rate, Central bank, bank of england, interest rate

Net lending to businesses falls further

Recently released figures have suggested that net bank lending to businesses in the UK continued to fall in the month of May despite the fact that the recession is now over and the economy is meant to be getting back on its feet. Since the onset of the global credit crisis there has been a lot of concern over lack of lending by banks to businesses in the UK, and this is something that many thought would result in the recession being more prolonged than it otherwise may have been.

The recent figures were released by the Bank of England, and showed that net bank lending in the month of May from banks to businesses had fallen. However, it was also noted that the rate at which banks were writing off bad loans had fallen. The central bank also noted that the demand for borrowing by smaller and medium sized businesses remained subdued, which may have contributed to the falling figures.

According to figures net bank lending to businesses has been falling on a month by month basis since December of 2008, although there was a slight respite in November of last year, when net lending by banks to businesses saw a modest increase. There are concerns over the amount that lenders are now having to pay to borrow themselves, and it is thought that these costs could end up being passed on to corporate customers.

The data came from the recent Trends in Lending report from the central banks, and report noted: “The intensification of market concerns over fiscal sustainability in a number of countries at the start of May resulted in heightened volatility and a reduction of liquidity in funding markets.”

Tags: bank, finance, england, Banking Services, Central bank, year, corporate customers, Business_Finance

Banking crisis easing according to central bank

It has been reported that the Bank of England in the UK has claimed that the crisis that has hit the banking industry has started to ease off, although it does not deny that the system remains highly vulnerable and could be easily hit by disruption again. Read more

Tags: bank of england, banking crisis, figure, paul tucker, Central bank, credit crunch, finance

Interest rate could rise again quickly

The chief economist at the Bank of England has warned that whilst the base interest rate in the UK has plummeted to its lowest level in history over recent months, following a series of six interest rate cuts in as many months, there is a good chance that it could rocket back up again in the future if policymakers decide that the rate needs to go up in order to keep inflation in check. Read more

Tags: interest rates, Mortgages, Central bank, Index, access, order, lending

Interest rates remain on hold after May meeting

After the May Monetary Policy Committee meeting the Bank of England announced that the base interest rate was to be kept on hold at its all time low of 0.5 percent. Read more

Tags: money, Central bank, interest rates, bank of england, base rate, Economic policy

Banks decides to look at quantitative easing to assist economy

Over the past six months the nation has seen the UK’s base interest rate drop dramatically from 5 percent in October of last year to just 0.5 percent by March of this year. This came after a series of six interest rate cuts from the Bank of England in as many months, taking the base rate to its lowest level in the three hundred and fifteen year history of the Bank of England. Read more

Tags: Mortgages, level, interest rates, industry, bank of england, Central bank, access, series

Barclays makes prediction on house prices and unemployment

The chief executive of the Barclays Group, John Varley, has recently spoken out about his predictions for both house price movement and unemployment in the UK over the course of this year.

There have been a number of predictions made by a variety of industry groups and professionals with regards to how quickly and by how much house prices will fall, as well as with regards to how fast and aggressively unemployment levels will rise.

Varley stated recently that over the course of this year he expected house prices to slide by around 10-15 percent, with Barclays having predicted a total slide of between 25-30 percent between 2007 and 2009.

He stated: “We’re probably about halfway through that period, so in other words we’ve got another 10-15 percent to fall between now and the end of next year.”

He also said that he expected unemployment levels to rise by over 7 percent over the course of this year.

With regards to unemployment levels he stated: “I think an additional 700,000 people unemployed over the course of the next 12 months is certainly possible to contemplate.”

He said that banks, central banks, and the government were partly to blame for the recession and the financial problems being experienced in the UK.

He also said that Barclays had refused a government bailout because it wanted to remain independent so that its growth overseas would not be marred, stating: “If British taxpayers’ money is going to be deployed in a bank as a result of the government owning shares in that bank, then a big part of the agenda of that bank and a lot of that incremental capital has to be directed at the UK. Our UK business is extremely important to us, but we employ more people outside the UK than inside the UK, we have more customers outside the UK than inside the UK, and it’s very important to me that that agenda of growth outside the UK is unimpaired.”

Tags: Central bank, barclays house prices, Barclays Group, Business Finance, unemployment

Base rate at lowest in over three centuries

Following the most recent cut to the UK base interest rate the base rate has now dropped to its lowest level in over three centuries. Read more

Tags: economy, series, interest rates, Central bank, meeting, base rate

Measures announced to rescue banks

The Prime Minister recently called a press conference where he not only announced a surprise 0.5% cut in interest rates a day ahead of the scheduled Monetary Policy Committee meeting, but also unveiled a package of measures aimed at rescuing the British banking system. It is thought that around £400 billion will have to be injected by the government to put the rescue plan into place, and this will come from the public purse – something that has resulted in mixed reactions from members of the public. Read more

Tags: uk, government, GBP, cut, Lloyds Banking Group, Alistair Darling, Central bank, banking crisis

Inflation levels continue to soar

Inflation levels in the UK have been at the centre of concern for the Bank of England and other government sectors for some months now, having rocketed to way over the government’s target earlier this year, and showing signs that the rise is set to continue. The government target for CPI inflation is 2%, but for the past few months it has soared out of control. In May the level of inflation hit 3.3%, and this resulted in the governor of the Bank of England, Mervyn King, having to write to the Chancellor of the Exchequer, Alistair Darling, to explain why inflation levels had soared so high, and what was going to be done to bring them back towards target.
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Tags: cost, Many industry officials, The Prime Minister, industry, inflation, Central bank

Are you planning to remortgage?

Over recent months many people with mortgages have decided to remortgage for one reason or another. Some have come off special deals that were valid for a limited time and have been forced to remortgage or risk the expensive of being pushed onto the lender’s standard variable rate, and others have decided to remortgage because they can get a better deal elsewhere, saving them money on their borrowing. However, a recent report has shown that there could be a dilemma now facing those planning to remortgage, as there is now confusion over what will happen with interest rates. Read more

Tags: security, mixed advice, arrangement, remortgage, convinced base rate, Central bank