The next couple of months will prove to be quite interesting. At the moment however BOE appear to be taking the wait and see approach. A lot will depend on how the Funding for Lending Scheme goes. There is talk at the moment that the government may fully nationalise RBS in a bid to force them to lend.
(Taken from Mortgage Strategy)
The Bank of England has held off making any changes to monetary policy despite the weakening economic outlook for the UK.
At today’s Monetary Policy Committee meeting, policymakers voted to hold the base rate at its historic low of 0.5 per cent for the 41st month running and kept the quantitative easing programme at £375bn.
A preliminary estimate by the Office for National Statistics last month suggested that the economy contracted by 0.7 per cent in the second quarter while more recent business surveys point to a weak start.
However, economists expected the Bank to keep monetary policy steady today, despite this deterioration in economic indicators.
Last month, the nine members of the MPC unanimously voted in favour of expanding QE, which is officially know as the asset purchase facility, by £50bn. This makes it unlikely that fresh QE will be announced until the current bout ends in November.
In addition, the minutes from the MPC’s July meeting imply that the Bank will wait until the Funding for Lending scheme – which started yesterday – is deemed a success or not before putting further interest rate cuts back on the table.
Legal & General Mortgage Club managing director Ben Thompson says: “Following the dismal estimated GDP figures for the second quarter, as well as the most recent poor manufacturing surveys, many will be hoping for an Olympic boost to the results over the next three months and some sort of meaningful improvement. Some are sceptical as to whether we will actually see this now, so optimism is fading somewhat.
“No change to QE or the rate itself this month was a surprise, however there is a good chance the Bank will have to act again later in the year if this pessimism is well placed and we see no new positive signs of growth. This may come in the form of a cut to the base rate.”
(Taken from Mortgage Strategy)
The Bank of England has held off making any changes to monetary policy despite the weakening economic outlook for the UK.
At today’s Monetary Policy Committee meeting, policymakers voted to hold the base rate at its historic low of 0.5 per cent for the 41st month running and kept the quantitative easing programme at £375bn.
A preliminary estimate by the Office for National Statistics last month suggested that the economy contracted by 0.7 per cent in the second quarter while more recent business surveys point to a weak start.
However, economists expected the Bank to keep monetary policy steady today, despite this deterioration in economic indicators.
Last month, the nine members of the MPC unanimously voted in favour of expanding QE, which is officially know as the asset purchase facility, by £50bn. This makes it unlikely that fresh QE will be announced until the current bout ends in November.
In addition, the minutes from the MPC’s July meeting imply that the Bank will wait until the Funding for Lending scheme – which started yesterday – is deemed a success or not before putting further interest rate cuts back on the table.
Legal & General Mortgage Club managing director Ben Thompson says: “Following the dismal estimated GDP figures for the second quarter, as well as the most recent poor manufacturing surveys, many will be hoping for an Olympic boost to the results over the next three months and some sort of meaningful improvement. Some are sceptical as to whether we will actually see this now, so optimism is fading somewhat.
“No change to QE or the rate itself this month was a surprise, however there is a good chance the Bank will have to act again later in the year if this pessimism is well placed and we see no new positive signs of growth. This may come in the form of a cut to the base rate.”
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