That time of the month - Interest Rates! [Jan 08]

ruggedtoast

It will be a cut imo - Gordons in trouble with the Unions about pay deals and the housing market is creaking to a halt. He needs positive headlines. The MPC is about as independent of government meddling as every other quango Nu Lab has appointed in the last 10 years so will do what is politically popular.

Few un-retired voters have appreciable savings anymore. Even fewer understand the relationship between interest rates and inflation. For most people the only significance interest rates have are to make their mortgages go down or up every month.

But why would Gordon want to take such an economically reckless move right now? I honestly believe its because the prat is wants to call another election this year. He's grasping for anything that can make his popularity rise enough to squeak through an election as he knows he has no chance of winning in 2 years time.

poppy10_2

Rover wrote: »

Things could be swaying to 0.25% cut. Alot of pressure on the MPC.

Sadly, I agree with you. I was thinking they'd hold, but having heard Alistair Darling and Gordo several times this week talking about how they are putting the squeeze on public sector pay "to allow the Bank of England to cut rates", it is clear that there is an immense amount of political pressure being applied to the MPC to ignore their inflation-targeting remit and keep house prices rising.

0.25% cut, Merv to vote for a hold and be sacked within the next three months..

Generali

poppy10 wrote: »

Sadly, I agree with you. I was thinking they'd hold, but having heard Alistair Darling and Gordo several times this week talking about how they are putting the squeeze on public sector pay "to allow the Bank of England to cut rates", it is clear that there is an immense amount of political pressure being applied to the MPC to ignore their inflation-targeting remit and keep house prices rising.

0.25% cut, Merv to vote for a hold and be sacked within the next three months..

Incomes policies didn't work in the 1970s and they won't work now. Public employees can always strike as they know that there'll be no impact on their employment or career.

mystic_trev

Generali wrote: »

Incomes policies didn't work in the 1970s and they won't work now. Public employees can always strike as they know that there'll be no impact on their employment or career.

Gordon can always threaten to scrap their 'Final salary' Pensions!

Generali

Oh well. It'll be funny watching the unions bringing down another labout government if nothing else. I could do with a laugh.

merlinthehappypig

Another good article in todays FT:

Fears grow for UK economy

Sterling fell to an 11-year low against European currencies on Wednesday after unexpectedly poor Christmas sales figures from one of Britain’s leading retailers raised fresh fears about the health of the UK economy.

The weak Marks and Spencer trading statement, which came ahead of a Bank of England meeting to set interest rates on Thursday, sent shockwaves through retail, airline and travel company shares across Europe.

The FTSE 100 index fell 1.3 per cent, with retail shares having their worst day for 20 years, slumping by 9.6 per cent. Similar fears of slowing consumption across Europe pushed the FTSEurofirst 300 index 1.2 per cent lower.


Airline shares were also hard hit. EasyJet’s share price tumbled for the second day in succession, closing 7.9 per cent lower after a fall of 13.9 per cent on Tuesday. Tui Travel fell by 14 per cent, Ryanair by 8.1 per cent and Air France-KLM by 5.8 per cent.

Sir Stuart Rose, chief executive of M&S, joined the chorus of retailers calling on the Bank of England to cut rates.

He said: “We need an interest rate reduction. It is the toughest [trading conditions] I have seen in a decade ... This is not a banana republic, this is Great Britain. But clearly people are very worried.”

Sir Stuart’s comments came the day after Alistair Darling, the UK chancellor, broke the long-standing convention not to put political pressure on the Bank of England over interest rates, arguing it had “room for manoeuvre” on monetary policy.

The chancellor’s words brought swift condemnation from economists keen to preserve the independence of the central bank’s monetary policy committee.
Professor Willem Buiter of the London School of Economics, a former MPC member, said Mr Darling should “learn and practise the art of silence” when it comes to rates decisions as it is “undermining one of the crowning achievements of the Blair-Brown years”.

The MPC’s deliberations over rate cuts were severely complicated by the rapid decline of sterling over the past month, as a weaker currency will stimulate the economy and feed into higher import prices.

Sterling dropped another 0.5 per cent against the euro on Wednesday, leaving it at its lowest against that currency since the euro’s creation in 1999, and its weakest against European currencies since the end of 1996. It also fell 0.7 per cent against the dollar to $1.9575, its lowest level in nine months.

Since peaking against the dollar above $2.11 in early November, the pound has fallen more than 7 per cent against the greenback and has dropped 6.5 per cent against the euro.

Currency analysts said they expected the pound’s decline to continue as the Bank of England would be forced to cut rates. Ashraf Laidi at CMC Markets said: “We had described the pound as the ‘dollar of 2008’, and so far it hasn’t disappointed”.

I've changed my mind since my earlier post and reckon rates will come down another 0.25% today. This Government clearly think that encouraging people to get into debt that they can't afford under the false security of higher house prices is more important than a fair and stable economy.

lynzpower

I've changed my mind since my earlier post and reckon rates will come down another 0.25% today. This Government clearly think that encouraging people to get into debt that they can't afford under the false security of higher house prices is more important than a fair and stable economy.

thats how I feel

safe pair of hands. Nuff siad

merlinthehappypig

The pound has dropped sharply against both the Euro and US dollar this morning so it looks like a cut is on the cards.

Another fine mess you've got us into, Gordon.

mystic_trev

I just got odds on Betfair of 75:1 for a 0.50% drop. Extremely unlikely but hey, who knows?

sm9ai

I reckon it will be a cut as well now but I so hope its not!

Looks like all those ISA's will be next to worthless if these cuts keep coming.