25
Jul
Interest rate rise unlikely in near term, says Bank.
There is a reduced chance of a rise in interest rates in
the near term, given recent economic weakness, Bank of England
policymakers have said.
Minutes from its July meeting showed the Monetary Policy
Committee voted seven to two in favour of holding rates at 0.5% for
the second month in a row.
Spencer Dale and Martin Weale voted again to raise rates to
0.75%
Adam Posen again voted to increase the Bank's quantitative
easing programme by £50bn to a total of £250bn.
The voting pattern came as no surprise as the MPC has been split
on monetary policy for some time.
From February to May, three members had voted to raise rates -
Mr Spencer, Mr Weale and Andrew Sentance.
Mr Sentance, who had been the MPC's most hawkish member, having
voted to raise rates to 1%, was replaced after the May meeting by
Ben Broadbent, a former Goldman Sachs economist .
Mr Broadbent voted to hold rates in both June and July.
Eurozone risks
The MPC said business surveys had pointed towards "continued
modest underlying economic growth in the second quarter", but some
softening in the outlook for the third quarter, in both
manufacturing and services.
It said the risks posed by an escalation of the eurozone debt
crisis remained "substantial".
"The funding costs faced by the major UK banks remained
elevated, in part reflecting those risks emanating from within the
euro area, and were likely to continue to affect the price and
availability of credit to many households and businesses
adversely," the minutes said.
"Recent developments had reduced the likelihood that a
tightening in policy would be warranted in the near term," it
added.
David Kern, chief economist at the British Chambers of Commerce,
said if rates were kept on hold until early 2012 it would be a
welcome development.
"With wage pressures remaining modest, and with businesses and
consumers facing acute pressures, it is right to wait before
raising rates," he said.
"At present, only one member of the committee has voted for
increasing the QE programme, but if the economy continues to shows
sign of weakness in the next few months, the MPC should consider
this option more seriously to avoid a setback."
Location still believe that with the southampton housing market
still firmly in its 10 year dip there is not going to be a better
time to either buy or sell your dream home or next investment
property as house prices will soon start to regain strength and
interest rates can only go one way.
source: http://www.bbc.co.uk/news/business-14214630