Expect an interest rate cut in November

IveSeenTheLight

Came across a website saying there is a possibility of an interest rate cut in November.

http://www.ppmagazine.co.uk/index.aspx?cid=1001

It will be interesting to see if this happens and what the effects would be.

I personally think it will just help the retail market at this time of year and will do nothin gto change the effect on house prices / availability.

This is traditionally a slow time for properties anyway

carolt

3.20am??!

pickles110564

I heard some one say in the pub interest rates are going up by 3%

Lotus-eater

Must be true then!

Lotus-eater

http://business.timesonline.co.uk/tol/business/economics/article2681740.ece

free4440273

Lotus-eater wrote: »

Must be true then!

:rotfl: shepherds pie must have been good.

epz_2

a major problem with a rates cut in winter is food prices and oil prices are going nuts, almost $90 a barrel at the moment and the price os food staples going up 40%.

thats not event talking about chinas (where all our stuff comes from) having 10% wage inflation.

a drop in interest rates will drop the £ exchange rate which then will see prices shoot up, if they have sence they will keep people skint till after christmas.

Romani_Ite_Domum

I think the current price of oil is enough to be a inflationary threat in the medium term. Personally I think they will hold.

WTF?_2

epz wrote: »

a major problem with a rates cut in winter is food prices and oil prices are going nuts, almost $90 a barrel at the moment and the price os food staples going up 40%.

thats not event talking about chinas (where all our stuff comes from) having 10% wage inflation.

a drop in interest rates will drop the £ exchange rate which then will see prices shoot up, if they have sence they will keep people skint till after christmas.

Yep - fuel prices (petrol and home heating oil) are major thorns in the side of the government when it comes to messing around with interest rates. Those that sell fuel don't hang around to put the prices up at the slightest excuse meaning the public get to see instant results of falling currency value/rising oil prices.

Oil is phenomenally expensive, priced in dollars, right now. The only thing that keeps it from being even more expensive for the average UK person is the fact that the dollar is extremely weak against the pound.

A drop in UK interest rates would precipitate a drop in the value of sterling - meaning instantly higher fuel prices. Meaning very cheesed off members of the public. Petrol is already over a quid a litre at most places and heating oil is much more expensive than it was at the start of the year.

Even though the govt target inflation in CPI terms which specifically excludes fuel prices (hmmm) the higher costs of road fuel will mean knock on prices increases in goods in the shops as nearly everything these days is hauled over the UK by HGV. Anything derived from oil - such as plastics, pesticides etc - will also become more expensive.

Will the government risk rocketing prices/inflation to give the housing market a boost? Well, they still might. However there's now no guarantee that lower central bank interest rates will be passed on to mortgage customers thanks to the credit crunch.

IveSeenTheLight

!!!!!!? wrote: »

Yep - fuel prices (petrol and home heating oil) are major thorns in the side of the government when it comes to messing around with interest rates.

Lets not forget that the reason that petrol is so high is due to the government tax.
Many countries outside the UK have a much lower petrol price.

However there's now no guarantee that lower central bank interest rates will be passed on to mortgage customers thanks to the credit crunch.

Many mortgages are directly linked to the BoE interest rate (trackers), others are fixed. I guess only variable would depend on the lendors passing on any cuts

epz_2

IveSeenTheLight wrote: »

Lets not forget that the reason that petrol is so high is due to the government tax.
Many countries outside the UK have a much lower petrol price.

agreed, much of the cost of petrol is tax but i think 30-40% is still raw material cost, it isnt that long ago oil was $10 a barrel and its pushing $90 now.

the high tax is actually a bit of a bonus since it has not only ensured that most of the cars arround hav much better mpg than americans drive but also insulated us from such inflation shocks caused by massive price spikes.

our petrol prices have recently gone from about 80p to 95p in the last few years while the yanks have seen fuel costs jump by the same massive ammounts as the oil price has, that is a nightmare for inflation.

just to add a bit of context i love my cars and driving a 4.4liter V8 would love too see low fuel costs but agree that even by accident using taxation to reduce the countries dependance on erraticly priced raw materials controled mostly by people who want us dead.