Where am I? 
Home Investment Economics / Markets
Categories: Economics / Markets
Topics: Bank of England| Mervyn King| interest rate
Speculation is mounting the Bank of England may be close to cutting base rates to 0.25% and pumping at least £50bn more into the economy through quantitative easing.
Ahead of this month's Monetary Policy Committee meeting on Thursday, poor figures for jobs and retail sales on top of the world economic crisis are piling pressure on the Bank to expand its programme of quantitative easing, the Daily Mail reports.
To date, the programme has been worth £200bn or 14% of gross national product.
Ben Broadbent, who joined the Bank's Monetary Policy Committee in June, said in a recent interview that he was 'reasonably close' to voting for increasing QE.
He said the international environment was 'clearly disinflationary' which provides support for further money printing, according to the Mail.
Meanwhile, a quarter point cut in base rates to 0.25% has been widely discussed, despite arguments as to whether the cost of borrowing is already so low this would have little effect.
The speculation has already hurt savers with the best fixed rate bond deals being pulled.
| Share | |
| Comment | BoE mulls rate cut to 0.25%; Odds shorten on more QE |
More economics / markets news
Email alerts
Recommended reading
Categories
Topics
Comments
Odds Shorten on more QE
"the international environment was"clearly disinflationary"" - tell that to hard up pensioners or, indeed, anyone living on the real planet buying food and petrol. The truth is that the politicians have no idea how to cure our woes. A base rate cut to 0.25% will make no difference whatsoever to the economic crisis which has peaked after 50 years of governmental profligacy and incompetence - not just in the UK but in all 'developed' countries. The only thing that has kept the US afloat has been perpetual war. As for QE we only have to look at hyperinflation in Germany between the world wars to guess what will eventually happen to the value of savings and pensions. And still the useless political class will lord it over us ensuring that their own lifestyles remain largely unaffected.
Posted by: Bill Wells
Sentance
In February, Mr Sentance was calling for an increase of 0.50%. Is this gentleman still advising anyone anywhere?
Posted by: Ken Durkin
Who benefits?
Right on Rob! And who exactly will benefit from such a reduction? We presently have a base rate of 0.5%, but what rate do small businesses get on overdraft? 14%+ is fairly common. How much are you charged on your credit card – around 19%. What of mortgage rates? 3.5% to 4.5% is fairly widespread. Mortgage rates are based more on Euribor than base rate which is around 1.5% - so mortgage margins still represent well over 150% margin on cost. Savers on the other hand get shafted again. What incentive is there for saving? So the answer to the question rather stares one in the face – the reductions will evidently benefit the banks.
Posted by: Harry Katz
The last time
Since 1694 the last time rates were anywhere near the present rate was 26 October 1939 when it fell to 2.0% from 2.50%. It remained at 2.0% for 12 years until 8 November 1951 when it was raised back to 2.50%...
Posted by: Ken Durkin
Related articles
Most Read
Audio / Visual
With the industry's biggest fund managers, IFAonline welcomes you to the media centre.
This year we have 14 awards designed to mark out the very best products in a highly competitive and innovative market. This includes three new awards for 2011 to reflect the developments in this rapidly growing market: Best Dual/Multi-Index Product, Best Structured (Oeic) Fund and Best Structured Product Provider.
Events
Poll
|
|
Job search
Ifaonlinejobs will open the right investment career path for you. Search hundreds of vacancies on www.ifaonlinejobs.co.uk now
In Focus
Two months left before the ‘real RDR deadline’ – are you compliant with the required professional...
Viewpoints
Recent market uncertainty has seen extreme volatility in investment markets over the last...
sponsored by
but who will benefit?
If this rate cut happens I wonder how many SVR rates will be reduced by banks? My guess is very few/none. I mean, why would they when they'll be busy counting £50B on their balance sheet. Damn, I hate Mondays.
Posted by: Rob SImpson