Despite speculation that it would cut rates, the Bank of England held the UK’s main interest rate at 0.5 per cent yesterday.
The Monetary Policy Committee voted 8-1 to leave rates unchanged, but minutes of the meeting showed most members expect the Bank will take some action next month. The Bank said: ‘Most members of the committee expect monetary policy to be loosened in August. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.’ Interest rates have remained on hold since the Bank cut its key rate to the record low of 0.5 per cent in March 2009.Kevin Caley, chairman of peer-to-peer lender ThinCats, said: ‘The Bank of England may have kept interest rates at 0.5 per cent for the time-being, but a rate cut to stimulate the economy and free up money for lending seems inevitable. When this happens, it will be miserable news for Britain’s hard-pressed savers, who have been earning dismal returns on their money since the financial crisis.
‘In such uncertain economic times, the prospect of interest rates returning to pre-crisis levels any time soon is highly unlikely and anyone with money in the bank should be rethinking their savings plans.’
As investors continue to digest the Bank of England’s latest decision, UK shares dipped further this morning and the pound edged higher. At the open on Friday, the FTSE 100 was down 22.03 points at 6,632.44. The pound was up 0.19 per cent against the dollar at $1.3369. Against the euro, sterling was 0.08 per cent higher at €1.2013.
Housing The Government must build 300,000 homes each year in England to help solve the housing crisis, an increase of 50 per cent from its current target, a committee of Lords has advised. The Telegraph reports that the cross-party House of Lords Economic Affairs Committee said that the Government had to ‘recognise the inability of the private sector, as currently incentivised, to build the number of homes needed’. Lord Hollick, chairman of the committee, also criticised the Government for being ‘too focused on home ownership’. In other housing news, a 10 per cent fall in house prices would put almost one in 10 borrowers in the north of England in negative equity, credit ratings agency Moody’s has warned. The agency said there was a ‘persistent disparity in the UK’, with northern borrowers most vulnerable to price fluctuations. A 20 per cent fall in prices would mean 22 per cent of them owed their mortgage lender more than their property was worth, while less than 1 per cent of borrowers in the south would be in the same position. Meanwhile, government attempts to stop the UK property market being exploited by international money launderers are ‘totally inadequate’ and the country has instead ‘laid out a welcome mat’ to criminals, the House of Commons home affairs committee has said. Accrording to The Guardian, the influential panel of MPs, chaired by the Labour backbencher Keith Vaz, said it was disgraceful that at least £100 billion was being laundered through the UK every year and astonishing that just 335 out of 1.2 million property transactions last year were deemed to be suspicious by law enforcement officials. Debt Britain is a nation of debt jugglers, constantly moving large balances between cards until we hit ‘money maturity’ in our fifties and decide to stop playing a game of loans. According to a survey from the AA, 5.4 million people have transferred balances between credit cards. On average, people playing the game of loans have made three transfers while 2.6 million (20 per cent of balance transfer card users) have made more than five balance transfers in the past year. People are juggling an average of £2,353 worth of debt between cards and 1.6 million (10 per cent) Brits are playing the game with over £5,000 worth of debt. Pensions About 3,500 Post Office workers are being forced to take a cut in pension benefits as the Government-backed service tries to cut costs. About half the Post Office’s 7,000-strong workforce is being forced to shift from a final salary pension scheme to a defined contribution scheme, a move that unions say could cut retirement benefits by 30 per cent or even more in some cases. Finally…While the nation is gripped by Pokemon Go fever, the Association of British Insurers has warned users not to get so swept up they have an accident.
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