| UK
Interest Rate: 5.5%
UK
Interest Rates Forecast: Cut expected by many economists
in February
Bank
of England Holds Rates for January
Following
the monthly meeting of the Bank of England's Monetary
Policy Committee (MPC) on the 9th January, the Bank announced
that it would be leaving interest rates
unchanged, at 5.5%, in January.
Although
many businesses were calling for rates to be cut, many
economists expected the MPC to leave rates unchanged due
to continuing inflationary pressures - particularly oil
prices.
Calls
for cuts are largely from interested parties such as retailers
and mortgage lenders, who see their businesses being placed
under pressure by reduced consumer spending power.
It's
thought that one of the main reasons for leaving rates
unchanged this month was that the MPC members wanted to
see the contents of February's Bank of England inflation
report before making a decision to change rates.
Many
economists think a rate cut is more likely in February,
but this could be highly dependent on whether there is
any reduction in inflation by that time.
New
Official Report Confirms Credit Tightening
A
new report from the Bank of England has confirmed what
many of us have already experienced - borrowing money
is getting harder and more expensive.
The
quarterly Credit Conditions Survey found that the last
quarter of 2007 had seen the "availability of secured
credit [mortgages and secured loans] to households"
being "reduced materially". At the same time,
the Bank found that demand for such lending had increased
over the last three months.
In
plain language, this means that borrowers are finding
it harder to get home loans and mortgages, especially
if they have less than perfect credit histories. This
could be a sign of things to come in 2008, although some
levelling out of the credit market is
expected later this year.
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