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Pause in rate cuts is ‘missed opportunity’

The Council of Mortgage Lenders says it is disappointed the Bank of England’s monetary policy committee did not cut base rate last week, failing to anticipate worsening economic conditions.

The MPC voted to maintain rates at 5 per cent after last month’s 0.25 per cent cut.

CML director general Michael Coogan says: “We understand the conflict between slowing economic growth and rising inflationary pressures and the uncertainty over some of the data reflected in the split views of MPC members last month. However, the MPC had an opportunity to act to anticipate the worsening economic environment today and it is disappointing there has been no change.

“Mortgage and housing market conditions will remain challenging for the rest of this year but the majority of existing borrowers are coping well. Anyone in financial difficulty should contact their lender or a debt adviser.”

Royal Institution of Chartered Surveyors chief economist Simon Rubinsohn says: “We are disappointed that the MPC chose to leave the base rate on hold. RICS appreciates the risks associated with the recent pick-up in inflation and acknowledges the danger of it moving into letter-writing territory during the second half of the year but the tone of recent data and surveys suggest that the threat of a sharp economic slowdown is the more pressing issue for the authorities.”

John Charcol senior technical manager Ray Boulger says: “This pause in the programme of rate cuts will allow the MPC time to assess the impact of its special liquidity scheme available to banks and five building societies before deciding on the scale and timing of further cuts.”

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