MSE News: Bank of England holds base rate at 0.5%

MSE_Luke

The Bank of England has held the base rate at 0.5% – despite predictions it would cut it...

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'Bank of England holds base rate at 0.5%'

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kingrulzuk

MSE_Luke wrote: »

The Bank of England has held the base rate at 0.5% – despite predictions it would cut it...

Read the full story:
'Bank of England holds base rate at 0.5%'

Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.

:j :j :j :j :j

Pincher

They were saying 80% of the usual suspects were expecting a cut.
Some guest on BBC Business Live was cocksure that it was going to be 0.25%.

A repeat of the Brexit result.

Can we still believe in weather reports?

EdGasket

Pincher wrote: »

Can we still believe in weather reports?

Of course; sunny spells and scattered showers.

alternate

Pincher wrote: »

They were saying 80% of the usual suspects were expecting a cut.
Some guest on BBC Business Live was cocksure that it was going to be 0.25%.

It was more that the market had already priced in the 80% chance of a cut. It is why sterling rose slightly and shares dipped.

They were going off decent info, I think the BOE just pushed it a month.

The brexit thing was more hedgefunds betting on the outcome.

DragonQ

How are they going to raise the base rate again? They've shot themselves in the foot over the last 7 years: low mortgage rates have increased demand and prices of houses and now any rise in the base rate now will force a lot of people out of their homes.

alternate

DragonQ wrote: »

How are they going to raise the base rate again? They've shot themselves in the foot over the last 7 years: low mortgage rates have increased demand and prices of houses and now any rise in the base rate now will force a lot of people out of their homes.

They aren't. They are talking about cutting it. Nobody mentioned raising it.

Although I wish they would. Sensible people with mortgages will have (or should have) accounted for small rate increase when they borrowed and the flip side of low rates is savers earning less than inflation.

HornetSaver

DragonQ wrote: »

How are they going to raise the base rate again? They've shot themselves in the foot over the last 7 years: low mortgage rates have increased demand and prices of houses and now any rise in the base rate now will force a lot of people out of their homes.

Brexit should cut demand and to my knowledge Theresa May isn't planning a reduction in housebuilding.

They should just whack the base rate up to 2% now, and offer a four year window in which unaffordable mortgage rate rises can be deferred to the Government in the form of an equity loan (cut the maximum first time buyer equity loan to 10% to help pay for it).

The housing market would cool off gradually as the overstretched realise their best bet is to downsize, relocate or cut their cloth before the end of the parliament, rather than risk a further rise.

The size of the rise would admittedly make consumers more reluctant to borrow for non-essential purposes, which would inevitably cool consumer spending. But frankly now is the right time to bite that bullet, so that we front-load the necessary brake on household borrowing which is necessary and inevitable, and have gotten used to slightly more normal rates by the time the Brexit process is concluded.

Besides, it's far easier to make future decisive rate moves from a baseline of 2% than from 0.5% or 0.25%.

Ballard

Raising interest rates would automatically increase the amount that the country pays to service the national debt so that alone would deter the authorities from doing so.

Additionally, the markets would go bonkers after such a massive change. The stock market would probably crash and Sterling would strengthen suddenly, thus creating chaos whilst reducing confidence in the UK economy.

Ballard

kidmugsy wrote: »

The remnants have put on a pretty unedifying display, haven't they? Who could have guessed that there were so many Violet Elizabeth Botts amongst us?

Anyway, 80% of "experts" proved to be utterly inexpert. Knock me dahn wiv a fevver!

You're absolutely right. There was a lot of talk about job losses (from both sides) but it's been three weeks since the vote and I haven't heard of any large scale job losses.