The Bank of England’s Monetary Policy Committee. Hold UK interest rates at their record low of 0.5%
Interest rates have not increased since March 2009.
Consumer prices inflation (CPI) peaked in September at 5.2% – more than double the Bank’s 2% target – and has since fallen to 4.8% in November.
The Bank of England’s Monetary Policy Committee have again today voted to keep the base rate at its historical low of 0.5% and have also decided not to increase quantitative easing, currently standing at £275bn.
Consumer Prices Index (CPI) inflation rate fell to 5.0% in October from 5.2% the previous month and although this is higher than the Government’s target, the instability of the worldwide economies continues to be the principal factor in the MPC’s decision-making.
Many economists now believe that the Base Rate will remain at its current level for the foreseeable future.
The Government has announced that it is no longer going to extend the stamp duty holiday for first-time buyers as it claims the policy has failed to increase the number of first-time buyers entering the market.
The Chancellor George Osborne has failed to extend the stamp duty holiday beyond its end date of March 2012, despite calls to do so from industry bodies such as the Council of Mortgage Lenders.
In the 2010 budget, then Chancellor Alistair Darling announced the stamp duty threshold would double from £125,000 to £250,000 for first-time buyers but announced an increase in the rate for properties worth more than £1m from 4 per cent to 5 per cent. The stamp duty holiday is due to end on March 25, 2012.
The autumn statement says: “The government is publishing analysis showing that the stamp duty land tax relief for first-time buyers has been ineffective in increasing the number of first-time buyers entering the market.
“This relief will therefore end on March 24 2012 as planned.
The Bank of England’s Monetary Policy Committee has decided to hold base rate at 0.5 per cent for the 32nd consecutive month and to hold quantitative easing at £275bn.
The last rate change was on March 5, 2009, when it was reduced from 1 per cent to 0.5 per cent. On the same day, the Bank of England initiated a £75bn quantitative easing programme.
The quantitative easing programme was increased to £200bn in November 2009 and then increased by £75bn to £275bn last month.
Minutes from the October meeting of the MPC showed all members voted for an additional £75bn of quantitative easing.
The Bank of England confirmed on Thursday 4th August that the base rate will remain on hold at 0.50%. The Monetary Policy Committee (MPC) also voted not to inject any more money into the economy through its quantitative easing (QE) program. Minutes released later in the month will show whether there was a split in opinion amongst the members of the committee. Two MPC members voted to increase rates last month. There was also one vote to increase the QE program.
Inhouse opinion is that rates will stay low, possibly unchanged at 0.50% until March 2012
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As a professional mortgage adviser we charge a fee for the advice we give, whether you go direct to the bank or transact the business using our services. Banks and Building Societies offer rates for mortgages directly through them or though intermediary channels (ourselves). Rates can sometimes be more competitive through brokers and other times directly with the banks or building societies. Our job is to advise you accordingly and should that mean recommending a directly offered product then that is what we will do.
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Junes monthly meeting sees the Bank of England’s Monetary Policy Committee keep interest rates at 0.5% for the 27th month in a row.
Recent data has underlined worries about the UK’s economic recovery, which analysts took as a sign that the Bank would leave rates unchanged.
Despite the annual rate of inflation rising to 4.5% in April, up from 4% in March, and well above the Bank’s 2% target. Continuing high inflation still makes a rate rise likely this year, although with speculation that inflation could rise to above 5% in the coming few months due to increasing food and utility prices a rate increase could happen sooner.
Our thoughts are that due to the still high unemployment numbers and the pressure of increased household costs, interest rates could be placed on hold until early 2012.
Interest Rates 0.5%
The Bank of England Monetary Policy Committee (MPC) have frozen interest rates at a record low of 0.5% again for the 26th month.
With a reduced output in manufacturing and the construction industry, economists took this as a sign that the Bank would not increase interest rates. Continue reading
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