Bank of England rate cut looks more likely

Are they or aren’t they? Once again, a glimmer of hope that the Bank of England Monetary Policy Committee (MPC) may cut the interest rates by the end of the year, in-line with the possible subside in inflation.

The MPC voted seven to two to keep the rate at 5 percent at it’s last meeting, David Blanchflower wanting a quarter of a percentage point reduction, and Tim Besley wanting a quarter percentage point rise.

Observers say that the softer tone of the committee’s discussion, gives them reason to believe there will be rate increase, and with the 15 percent drop in oil prices, it seems that inflation pressures were easing.

It’s also been said by Amit Kara, of USB, that they envisage a rate cut around November, if the economic activity falters and commodity prices continue to fall.

According to the Industrial Trends Survey it puts business sentiment at a seven year low, and with restrictions on supply of credit its having s knock on effect on consumer spending on large items such as Cars and televisions, dining out has also been badly hit.

The council of Mortgage lenders reported gross lending on house purchases running 27 percent than this time last year.

Source: Independant