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Unanimous MPC vote holds bank rate at 0.5%

All nine members of the Bank of England’s monetary policy committee have voted in favour of keeping the base rate at a record low of 0.5 per cent.

Prior to the August meeting, the MPC had been split 7-2 in favour of keeping interest rates at 0.5 per cent, with Spencer Dale and Martin Weale calling for a 0.25 per cent increase.

But the minutes from the August meeting show Dale and Weale have now fallen in line with the rest of the committee due to weak economic data and turmoil in the financial markets.

The base rate has now been at 0.5 per cent for 29 consecutive months.

Adam Posen is the only member of the committee to call for an increase to the quantitative easing programme by £50bn to a total of £250bn.
The most recent change to the size of the programme was an increase of £25bn, bringing the total to £200bn, in November 2009.

John Charcol senior technical manager Ray Boulger says: “All of the economic indicators both from the US and Europe on the risk of us going into a double-dip recession look much higher than even a month ago.

“I think there is very little likelihood of a base rate rise next year. It looks highly probable we will see the base rate stay at 0.5 per cent until 2013.”


House prices down 2.1% year-on-year in July

House prices fell 2.1 per cent year-on-year in July, according to the latest house price index from the Land Registry. Prices increased 1.3 per cent between June and July, taking the average house price in England and Wales to £163,049. London was the only region to experience an increase in its average price over the […]


OFT issues warning over scam loan companies

The Office of Fair Trading is warning people to stay clear of scam loan companies which take upfront fees but fail to provide credit. It says there has been a 50 per cent year-on-year rise in complaints about loan scams, particularly credit applications which involve the consumer wiring or sending upfront fees through money transfer […]


MM leader: FSA must act if Sipp charges are manipulated

With the regulator taking a close look at the capital adequacy levels of Sipp providers, you can understand the recent flurry of speculation regarding consolidation in the sector. The FSA is understood to be concerned about the financial position of a number of providers, adding to a list of previous worries. Earlier this year, the […]


Money Advice Service is a good start for simplified advice

I am very relieved to see the launch of the Money Advice Service. It is the end-product or the latest product of the process that began with the Thoresen review and I know from remarks Otto Thoresen made at the Protection Review recently that he is very pleased to see the progress made. It is […]

Trouble ahead - thumbnail

Pensions: trouble ahead?

The pace of change in the pension’s space has been little short of astonishing, and has left thousands of employers struggling to keep their pension policy compliant, and also on the right side of current best practice and governance. Many employers, and indeed many in the pensions industry itself, would like to see a period of no change during the next term of government. This would give all sides a chance to catch up and draw breath. 


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There is one comment at the moment, we would love to hear your opinion too.

  1. The MPC is caught between a rock and a hard place. Raising interest rates is the traditional mechanism for damping down inflation but to do so now would probably cause massive problems for people whose mortgage payments are already at the limit of affordability and would have no effect on the escalating prices of energy and food. Also, it would provide the banks with an excuse to make the terms on which they’re offering loans to SME’s even tougher than they are already. Many are declined by applicants because the terms are simply so punitive. But there’s no way the government can change that without effectively dictating to banks the terms on which they must offer loans, which would amount to the government running them. Were such an idea even to be proposed, the banks would mount every legal challenge imaginable, apart from which the government doesn’t have the people capable of of determining just what terms might be fair as opposed to those which would compromise the commercial interests of the banks. The terms commonly offered for loans to SME’s nowadays are blatantly not TCF, but there’s nothing that either the government or its subsidiary the FSA can do about it.

    So the base rate has to remain at just ½% p.a. It’s a deeply unsatisfactory state of affairs but for the foreseeable future there appears to be no alternative.

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