Borrower's joy as BoE cuts interest rates again

poppy10_2

The Scotsman has a real scoop - apparently the Bank of England actually cut interest rates yesterday! Who knew?

http://edinburghnews.scotsman.com/latestnews/Borrowers39-joy-as--rates.3660908.jp

They'll probably take the story down soon, so here it is:

Borrowers' joy as rates cut for second month in a row
10 January 2008


By MICHAEL BLACKLEY


HOMEOWNERS, borrowers and businesses are celebrating today after the Bank of England announced a reduction in interest rates for the second consecutive month.

The Bank's Monetary Policy Committee made the decision to reduce rates by a quarter point to 5.25 per cent after a range of economic indicators and company results suggested consumers needed a boost to get them spending again.

It is the first time rates have been trimmed on two consecutive months since November 2001.

And economists believe that this will not be the end of the rate-slashing – with forecasts that rates could go down to 4.5 per cent by the end of the year.

The latest decision means that the average homeowner stands to save another £15-£16 on their mortgages if lenders pass the rates cut on to their customers. When added on to the savings from last month's cut it means that the MPC's most recent decisions could start to make a impact on the spending power of the average consumer, hit recently with spiralling food and energy bills.

Ron Hewitt, chief executive of the Edinburgh Chamber of Commerce, said: "I do not support the current pessimistic financial outlook so many express over the credit crisis, but they have good reasons for that view. This is the best antidote the MPC could offer, and I hope it heralds a trend for the year ahead of their decisions being deliberately supportive of building much needed confidence in the economy."

Many retailers found trade over the festive period difficult as consumers scaled back spending.

Marks & Spencer soured the mood yesterday by reporting its first quarterly drop in sales in more than two years and chief executive Stuart Rose said things were unlikely to improve until the end of 2008 or early 2009.

Although today's decision will provide some hope for retailers, Edinburgh-based HBoS's group economist, Martin Ellis, does not expect it to radically transform the state of the economy.

"It will help to stabilise confidence and spending but we still expect consumer spending to be softer and the property market to be weaker throughout 2008," said Mr Ellis.

"It is not surprising that the MPC cut rates today – it was only a question of whether it would do it in January or February. We still expect a further cut around May and the possibility of further reductions later
in the year."

Howard Archer, chief economist at Global Insight, said today's decision comes despite inflation pressures and shows there is "serious concern" within the MPC that growth could slow sharply in the coming months.

He expects the MPC to be closely monitoring growth, inflation and financial market developments before deciding if another cut is necessary.

But he added that it will also want to see that recently higher inflation expectations, rising utility bills and high food prices are not feeding through to push up wages.

"Further evidence of markedly slowing growth and ongoing tight credit conditions would lead to pressure for a further near-term precautionary interest rate cut," said Mr Archer.

"We now expect interest rates to be down to 4.5 per cent by the end of the year as extended below-trend growth increasingly dilutes underlying inflationary pressures."

worldtraveller

Kinda reminds me of the way the press write someone's obituary (in advance) when they are still alive! :rotfl:

dannyboycey

Not only do they pay less tax than us and get cheaper medication, they now get lower interest rates too! :rotfl:

nobblyned

I can see how they had another version waiting to go, what I'm amused by is the quotes in the article - they must ask people for two sets of quotes ahead of time prior to the decision.

m.colak

poppy10 wrote: »

The Scotsman has a real scoop - apparently the Bank of England actually cut interest rates yesterday! Who knew?

http://edinburghnews.scotsman.com/latestnews/Borrowers39-joy-as--rates.3660908.jp

They'll probably take the story down soon, so here it is:

Hi poppy am confused as been on their website and they haven't so either the paper has got it wrong or so has the main news on tv last night.

Ok got it now you were being very sarcastic lol.

nobblyned

m.colak wrote: »

Hi poppy am confused as been on their website and they haven't so either the paper has got it wrong or so has the main news on tv last night.

The paper has got it wrong, that's the point of the thread! Hence all the laughing smileys....

kingkano

http://edinburghnews.scotsman.com/business/Interest-rates-apology.3664685.jp

I dont believe you can find the article navigating their site, so I guess the link has circulated by email thru people who saw it?

dannyboycey

kingkano wrote: »

http://edinburghnews.scotsman.com/business/Interest-rates-apology.3664685.jp

"The mistake was spotted shortly afterwards"


It's still live! I don't think they've got the hang of this new fangled intraweb yet.

bigjoe

Hilarious!

kingkano

dannyboycey wrote: »

"The mistake was spotted shortly afterwards"


It's still live! I don't think they've got the hang of this new fangled intraweb yet.

Sorry I edited about the same time you posted. As I said, while the page is still live, you can't navigate to it from browsing their site. You need this direct URL to access it. So a bit sloppy but certainly not as bad as you highlighted.....

Now them putting the article up early yesterday was as you paint it now lol. very sloppy indeed.

aardvaak

Why is it that every month the media go about trying to convince the BOE to lower interest rates.

I may be wrong but I don't think there has ever been a time they have called for an increase. Why is this?

On the times rates have been reduced the newsreaders look happy and chirpy and on the times rates have gone up they look glum and miserable.