Fri, 11 Jan 08
Amid howls of protest, the MPC has voted to keep interest rates unchanged at 5.5%...
The Bank faced a tough decision, having to balance signs of a slowdown in consumer spending against indications of growing inflationary pressures.
The decision is likely to disappoint some retailers, who had called for a cut after poor Christmas sales figures. While rates have been held this month, many analysts expect the cost of borrowing to be lowered in February. While a rate cut could have lifted both consumer and general business confidence, it could also have risked fuelling price pressures growing on the back of higher energy and food bills.
Warren Bright, chief executive of propertyfinder.com, was critical of the MPCs decision: ‘The Bank of England is sleepwalking into a housing recession. Confidence in the property market is very shaky and many lenders have walked away from the mortgage market, or jacked up their rates and fees significantly. It is time for decisive action to reassure house buyers and sellers. Rate cuts must come on the agenda now.’
MPC ‘out of touch’
Mike Ratcliffe, Chief Executive of Wolsey Securities, commented: Today’s decision is a clear sign that the MPC is not sufficiently in touch with the realities affecting
The danger is that this apathy will increase the chances of the country talking itself into a recession. This would be a tragedy. Given the fundamental undersupply of housing and long term market demand there is no case to be answered for reducing house prices as has been the case in the
Lack of sympathy for FTBs
David Bexon, Managing Director of SmartNewHomes.com, added: Today’s decision to hold interest rates at 5.5% is unwise and does not reflect industry sentiment to make further cuts to kick start the housing market.
I am particularly disappointed at the lack of sympathy for first time buyers, who are still not being offered reasonable mortgage deals. Further interest rate cuts from now on must be made and the Government should also look at scrapping stamp duty for first time buyers altogether.
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