| UK
Interest Rate: 5.75%
UK
Interest Rates Forecast: Rate cuts likely, but probably
not this year
Fall
in Mortgage Lending in September - Are Rates Biting?
The
Council of Mortgage Lenders, which represents almost all
the UK's mortgage lenders, has this week published new
figures showing that total mortgage lending fell by 12%
from August to September.
A
seasonal fall of around 5% is normally expected at this
time of year - considerably less than the 12% the CML's
members have observed.
The
decline in lending is thought to be largely the result
of higher interest rates and tightening
lending standards. Disturbingly, the period covered by
the statistics took place before the shock of Northern
Rock's troubles. CML Director-General Michael Coogan says
that they expect further reductions in lending, saying
that "we expect to see monthly lending levels dip
below their 2006 levels for the first time this year".
Bank
Vote 8-1 to Hold Interest Rates
The
minutes of the October meting of the Monetary Policy Committee
were published this week. They reveal that the MPC seriously
discussed the pros and cons of an interest rate
cut in October, before putting it to the vote.
In
the event, only one member voted in favour of a cut, with
the remaining eight believing that it made more sense
to leave rates unchanged and wait for November's economic
figures.
A
Reuters poll of economist found that 42/62 expect rates
to fall to 5.5% or less in the first quarter of 2008,
but only 14/62 believe that rates will be but before the
end of 2007.
Inflation
Holds Steady
New
inflation figures, published this week, show that the
government's preferred CPI measure of inflation held steady
at 1.8% in September, just below the target 2% level.
The
more inclusive RPI measure of inflation dropped from 4.1%
to 3.9%.
This
stability suggests that interest rates
are working to combat increases in prices and many analysts
expect that the Bank of England will leave rates unchanged
for a little longer to protect against the inflationary
effects of food and oil price rises.
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