Bank of England holds interest rates at 5 pct
The Bank of England held interest rates at 5 percent for the second month running on Thursday despite evidence almost daily showing a sharply braking economyand signs the housing market could be in for a hard landing. The reason: inflation is...
The Bank of England held interest rates at 5 percent for the second month running on Thursday despite evidence almost daily showing a sharply braking economy
and signs the housing market could be in for a hard landing.
The reason: inflation is running a full percentage point above the central bank's target and is expected to go higher
still. Money markets had priced in almost no chance of a reduction at this month's Monetary Policy Committee meeting.
But analysts say the BoE will soon have to cut rates again -- borrowing costs have already come down three times since
December -- to bolster an economy battered by a global credit crunch and soaring food and energy prices.
"The economy is clearly slowing and the housing market has deteriorated sharply, so the MPC will need to cut rates later
this year to head off the risk of a recession," said John Hawksworth, head of macroeconomics at PricewaterhouseCoopers.
Figures out while policymakers were still in conference showed British house prices plunged 2.4 percent last month
alone, and 12,000 pounds had been wiped off the value of the average home over the last year.
and signs the housing market could be in for a hard landing.
The reason: inflation is running a full percentage point above the central bank's target and is expected to go higher
still. Money markets had priced in almost no chance of a reduction at this month's Monetary Policy Committee meeting.
But analysts say the BoE will soon have to cut rates again -- borrowing costs have already come down three times since
December -- to bolster an economy battered by a global credit crunch and soaring food and energy prices.
"The economy is clearly slowing and the housing market has deteriorated sharply, so the MPC will need to cut rates later
this year to head off the risk of a recession," said John Hawksworth, head of macroeconomics at PricewaterhouseCoopers.
Figures out while policymakers were still in conference showed British house prices plunged 2.4 percent last month
alone, and 12,000 pounds had been wiped off the value of the average home over the last year.