Call to Bank of England to cut interest rates
April 1, 2008
A number of industry professionals and agencies have been calling upon the Bank of England to cut interest rates to benefit the economy, according to recent reports. Since August 2006 interest rates in the UK have gone up five times, each time by 0.25%. This has taken the base rate from 4.5% to 5.75% leaving many consumers struggling to keep up with mortgage repayments and debt repayments, and leaving many others to face crippling rises in repayments when their low rate fixed rate mortgages come to an end in the coming months.
The Bank of England, however, has kept interest rates on hold for the past three months in a row, with no further rises since the last 0.25% rise in July. This is thought to be because of a fall in CPI inflation coupled with turmoil hitting the financial markets in the UK. According to many experts the Bank of England is taking a wait and see stance to see how the credit crunch affects the economy before making any changes to the interest rates, and many experts believe that interest rates will actually fall before the year is out.
This is something that will please the various agencies and professionals that have been calling for interest rate cuts. One official from the Ernst & Young Item Club, an economic forecasting group in the UK, stated: “Until recently, many analysts were expecting the Bank to up rates again to keep inflation under control. However, this has all changed in light of the current turmoil in the markets. A cut would show that the Bank of England is at last responding with appropriate vigour to the risks to UK growth and consumer confidence.”
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