Whilst the Bank of England’s’ Monetary Policy Committee, (MPC) has decided to keep Base Rate on hold at the historic low, the endless and sometimes tortuous debates around “to rise or not to rise” seem to be conducted in an ever-increasing cacophony of sound.
Among the many voices trying to shout out different things at once, recent reports that the UK economy has been “running out of steam” seem to have done enough in the short term at least, to convince the MPC to hold their nerve.
After another month of “will they or won’t they” and “they should, they really shouldn’t” economic and political discussion, the Bank of England’s’ Monetary Policy Committee, (MPC) have just about held firm yet again and decided to keep Base Rate on hold.
After the almost unprecedented 4 way split revealed in last month’s meeting minutes, it really looks like the Governor Mervyn King has a fight on his hands to keep any sense of unity and these public splits do the Bank no particular favours.
This week sees the next meeting of the Bank of England’s Monetary Policy Committee, (MPC), and the talk is once again about whether rates will finally rise. This time the meeting is held against the backdrop of some stinging criticism by the Governor Mervyn King of the Big Banks, that has unsurprisingly, not gone down as well as it could in Bank Boardrooms.
Basically, Merv warned that failure to reform the banking system and remove the “too big to fail” assumption could easily lead to another financial crises. Cuttingly, he stated that over the past two decades, too many people in financial services had thought “if it’s possible to make money out of gullible or unsuspecting customers, that’s perfectly acceptable”.
As the Bank of England Monetary Policy Committee, (MPC) sat and argued their very different views around potential interest rate changes, many in the mortgage industry pondered secretly, some publically, that quite frankly an early rate rise will be good for business.
After all, nothing is better than panicking people into action than a short, sharp shock.
The truth is that it might not be quite that simple and could provide as many problems as it solves. For many consumers, a sudden half point rise could prove to be the tipping point, especially if it is followed by another one or two increases later on in the year as predicted.
Last week was a mish-mash of contrasting news headlines that look like continuing into this week. Whilst events in the Middle East and talk of an oil crises overshadows much of the news, the revelation that the UK economy actually performed even worse than first thought in the last quarter may delay the impending rate rise by one month, at least until the next quarters figures are released.
I’m still betting on a rise by May and happy to take wagers!
Andrew Montlake, Director and Spokesperson for Coreco, gives his honest and forthright views on the mortgage market, economy and all things property related. Monty was voted "Mortgage Personality of the year 2008" and is the current holder of the British Mortgage Awards "Best Press Spokesperson" title. Expect expert analysis, delivered in a down to earth style with a side helping of exuberance.
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