07 Jul Bank of England Agree No Change in Bank Rate – Peter Gordon reports..
As expected, the Monetary Policy Committee have agreed to hold Bank Rate at 0.5%. Most economists are not expecting any increase until next year with a few predicting very little change until 2013.
Last month the latest member of the MPC’s rate setting committee, Ben Broadbent voted with the majority to hold rates. Mr Broadbent was formerly
An economist with Goldman Sachs and replaced his more hawkish predecessor, Andrew Sentance who had been backing a .5% increase to 1% since last February. His vote has swung the majority in favour of holding Bank Rate back to 7-2.
Despite their vote the minutes recorded that the MPC were still worried about inflation. UK Consumer Price Index inflation held steady at 4.5% in May according to the Office for National Statistics. This means that the CPI rate has now exceeded the BOE target of 2% for 34 of the last 40 months. The Retail Price Index (RPI) which included mortgage interest payments, was also changed at 5.2%.
According to a recent article in the Daily Telegraph 69% of outstanding mortgages are now variable rates. I would agree that variable or tracker mortgages a best suited to two years deals, but I am strongly advocating five year fixed interest rates for the more nervous borrower. I too am a little nervous in where UK interest rates will be in three years time and beyond!
Peter & Julia
A.J Buckley – 01483 426300