The pressure is on for the Bank of England
October 23, 2008
Further pressure is being piled on the Bank of England to cut the interest rate, as officials points out that Britain could otherwise face the worst effects of recession. With the Monetary Policy Committee meeting due soon, the governor of the central bank and other senior officials are feeling the heat, as industry groups and professionals warn them to put inflation worries on the back burner and focus on the state of the economy and the rising risk of a full blown recession.
A number of officials are urging the Bank of England to cut the base rate by 0.5% rather than the usual 0.25%, although some have already predicted that the base rate - if it is cut - will fall by just 0.25%, taking it to 4.75%. However, there is further pressure on the Monetary Policy Committee and the Bank of England because other industry groups are stating that rising inflation still poses a huge threat.
‘These are not usual times, and the need to demonstrate a willingness to limit both the ongoing plunge in activity and the fallout from the credit crisis is clear. It’s a close call, but we anticipate a 0.5 basis points move [to 4.5%] next week with a further 0.25 basis points to follow in December.’
One MPC member said that base rate cuts were now becoming urgent. David Blanchflower has been voting for rate cuts for a number of months now, and he said: ‘We are a committee of nine and we will make a decision on Thursday. But my view is that the interest rate must come down and I will be telling that to the committee.’
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- Call to Bank of England to cut interest rates 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
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- Problems with mortgages could go on for years to come Since last summer, which is when the global credit crunch made its way from the US to the UK, the mortgage market has been in chaos, and both lenders and consumers have been suffering. Decreased
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