Financial Services And Consultants, Stock Investment Advice - Home Spacer Investor Insight Spacer Devere Login
Investor Insight
deVere Login
PIC logo

P.I.C. - News

Skip Navigation Links

Home >  Label  >  Label

10 Jan, 2008

Published: 14:10 Thursday 10 January 2008
By: Matthew Goodburn, Investment Correspondent

The housing sector has reacted with dismay to the Bank of England's Monetary Policy Committee (MPC) decision to hold interest rates at 5.5%.

Many analysts had been factoring in a 0.25% fall but fears over rising inflation numbers appears to have held sway over the weakening economic backdrop.

Chief executive of finance specialist to UK house builders Wolsey Mike Ratcliffe attacked the MPC for ignoring the weakening consumer back drop.

He said: 'The decision is a clear sign that the MPC is not sufficiently in touch with the realities affecting UK consumers. While last month's cut was a step in the right direction, failing to follow this up with a further cut will inflict pain on consumers and businesses and does not provide us with a positive outlook for 2008. '

He added: 'The danger is that this apathy will increase the chances of the country talking itself into a recession.

David Newnes, managing director of Your Move estate agents accused the MPC of 'fiddling while Rome burns'.

He said: The MPC should have cut rates. The economy is still reeling from the credit crunch. The property market is suffering severely - transactions have fallen and house prices are stagnating. We need resolute action - not dithering.

'The Bank of England should be acting decisively to reinstate confidence across the wider economy. The property market, consumer confidence, and the wider economy are suffering while the MPC vacillates.'

The decision was made despite growing evidence of an economic downturn, highlighted yesterday by Marks & Spencer's worse than expected Christmas trading and the British Retail Consortium's (BRC) figures highlighting the worst Christmas trading on the High Street for three years.

BRC chairman Kevin Hawkins and Marks & Spencer chief executive Sir Stuart Rose had both called for a 0.5% cut in rates to stimulate consumer spending but fears over rising inflation appears to have won the day.

Despite the rate hold, ABN Amro's head of interest rate alpha Jon Cunliffe said he expected rates to have fallen to 4.5% by year end.

He added: 'While rising utility prices may put some upwards pressure on consumer price inflation, we feel that the disinflationary forces evident in the retail sector are likely to prevail.'

Contact Us
Valid XHTML 1.0 Transitional