Bank of England - hold or lower?

[Edinho]

Speculation that the rates are going to be reduced by 0.25%.

What do people think?

I think this going to be a sign of how the BOE really take economy. If they reduce rates them im afraid they have bowed down to the general public frenzy over house prices, and will prove to be spineless.

Getting a bit fed up of the majority of people who think the economy revolves around house prices.

Hoping they hold.

 

[Duke]

I hope they stay the same.

 

[Haircut]

Supposedly their only remit is to control inflation, if this really is the case they will keep them the same as CPI is at 2.1% and doesn't look like it's going to come down in the near future.

It will be interesting to see what happens, this is probably the first real test of exactly how independent the BoE is.

 

[Bear]

I hope they stay the same.

Me too, I have a fixed rate mortgage and have savings so dont care if they stay the same or go higher.

 

[chimaera]

Not sure what i want to happen but i believe they will hold the current rate. My fixed rate runs out at the end of 2008 so it would be nice if they've lowered a bit by then.

 

[Fusion]

I think this going to be a sign of how the BOE really take economy. If they reduce rates them im afraid they have bowed down to the general public frenzy over house prices, and will prove to be spineless.

Getting a bit fed up of the majority of people who think the economy revolves around house prices.

Hoping they hold.

I too hope that rates are held. House prices do not influence interest rates.

 

[scorza]

I hope interest rates come down. As I understand it, the current high rate of inflation is down to price rises in two very demand-inelastic commodities - oil and food. You can say that by keeping interest rates high overall inflation will drop, but I believe that it will be to the detriment to the economy as a whole.

When setting interest rates, the inflation target must take into account things that will be unaffected by interest rates.

 

[a1ex2001]

I too hope that rates are held. House prices do not influence interest rates.

No but interest rates influence house prices so the too can not really be looked at in total isolation, on a personal note I'm hoping they stay about the same or go up a bit to improve the income on my savings but not so much that nobody can afford to buy my house!

 

[Wicksta]

All the signs are there that rates will be reduced, probably by 0.25%. It's almost a dead cert.

 

[Berserker]

I hope interest rates come down. As I understand it, the current high rate of inflation is down to price rises in two very demand-inelastic commodities - oil and food. You can say that by keeping interest rates high overall inflation will drop, but I believe that it will be to the detriment to the economy as a whole.

I'm with this. House prices aren't the only factor driving rates in a downward direction, and even if they were, a lot of the recent economic activity has been consumer-led, so whether you like it or not there is something to be said for 'pandering' to consumer sentiment.

 

[Von Luck]

Bump em up, lets see those house prices tumble

 

[Berserker]

Not to mention the unexpected demise of NR with all that illegal taxpayers' money. What's a few billion between friends, eh?

 

[Rotty]

The economy is slowing and could do with the boost of a rate cut, however there are a lot of inflationary pressures at the moment ( oil prices being the main one ) and a rate could will add to the pressure



oh and I have 2 mortgages so cut the buggers by a load

 

[Felix]

Hold.

 

[Visage]

They have wider responsibilities than just themselves.

 

[Majago]

Really can't decide on this one. I'm going to go for hold but only by 5-4. Would not be surprised at all to see a cut though.

 

[Third Opinion]

They will probably be lowered by 0.25%. However given the state the banking world is in I will be surprised if the discount is passed on by the banks to the mortgage payers.

 

[#Chri5#]

Anyone else see Newsnight last night? The discussion with their own "MPC" was quite interesting IMO.

 

[Haircut]

They will probably be lowered by 0.25%. However given the state the banking world is in I will be surprised if the discount is passed on by the banks to the mortgage payers.

This is a key point IMO, the LIBOR seems to have diverged from the BoE base rate as no-one knows where the risks lie and they are unwilling to lend to others without adding in a risk premium in the form of a higher interest rate.

Even if the BoE lowers rates there is absolutely no guarantee that banks will lower their mortgage rates, some may even raise if conditions worsen over the next few months.

 

[Wicksta]

They have wider responsibilities than just themselves.
.

I still say rates will be reduced by 0.25% today. You only have to look at the market yesterday/this morning to realise that.