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  • BoE did not cut interest rate

    Bank of England keeps interest rate at 5.75 percent


    Thu Oct 4, 8:28 AM ET


    LONDON (AFP) - The Bank of England held its key interest rate at 5.75 percent on Thursday, opting for no change for the third month in a row as the central bank took stock of recent turmoil on world financial markets.

    Sterling rebounded slightly against the dollar following the announcement which was in line with market expectations.
    The decision by the BoE's Monetary Policy Committee (MPC) comes before a separate rate call at 1145 GMT from the European Central Bank, which is also expected to freeze eurozone borrowing costs at 4.00 percent.
    The nine-strong MPC gave no insight into its October decision, as is customary when no change is made to the so-called "repo" rate -- at which the central bank lends to commercial banks.
    Market watchers will have to wait until October 17, when minutes from this week's meeting are published.
    However, after the BoE put rates on ice in September, it took the rare step of issuing an explanatory statement, arguing that it was too soon to assess the economic effects of the global credit squeeze.
    Since its rate call in September the BoE had provided emergency funds to crisis-hit British bank Northern Rock, which has run into trouble sourcing credit.
    Before the markets chaos unfolded, many experts predicted the BoE might lift borrowing costs to 6.00 percent before the end of the year, as the central bank remains on guard against higher inflation.

    :confused: BoE did not cut. Kept interest rate 1 full point above US.
    What happened to the race to zero? Answer-They want all the money.

  • #2
    Re: BoE did not cut interest rate

    Originally posted by Gordo View Post
    Bank of England keeps interest rate at 5.75 percent


    Thu Oct 4, 8:28 AM ET


    LONDON (AFP) - The Bank of England held its key interest rate at 5.75 percent on Thursday, opting for no change for the third month in a row as the central bank took stock of recent turmoil on world financial markets.

    Sterling rebounded slightly against the dollar following the announcement which was in line with market expectations.
    The decision by the BoE's Monetary Policy Committee (MPC) comes before a separate rate call at 1145 GMT from the European Central Bank, which is also expected to freeze eurozone borrowing costs at 4.00 percent.
    The nine-strong MPC gave no insight into its October decision, as is customary when no change is made to the so-called "repo" rate -- at which the central bank lends to commercial banks.
    Market watchers will have to wait until October 17, when minutes from this week's meeting are published.
    However, after the BoE put rates on ice in September, it took the rare step of issuing an explanatory statement, arguing that it was too soon to assess the economic effects of the global credit squeeze.
    Since its rate call in September the BoE had provided emergency funds to crisis-hit British bank Northern Rock, which has run into trouble sourcing credit.
    Before the markets chaos unfolded, many experts predicted the BoE might lift borrowing costs to 6.00 percent before the end of the year, as the central bank remains on guard against higher inflation.

    :confused: BoE did not cut. Kept interest rate 1 full point above US.
    What happened to the race to zero? Answer-They want all the money.
    Nothing like a stagecoach holdup while the Marshall is tied up at a Parliamentary committee interrogation back at the jailhouse. BoE's King has to back away from his Matt Dillon impersonation veeery slooowly, so the BoE doesn't lose too much face, and he doesn't get shot in the back. His main problem is home prices in the UK are as inflated as Miss Kitty with implants.

    Two years ago the BoE thought it had housing inflation safely tucked away upstairs in the saloon. But the girls escaped, found the Northern Rock whisky behind the counter, and the party was back on. Marshall King would like to arrest them all, including the piano player, and dry out Dodge, but Gordon Brown will have none of that. With an election looming, Brown will want to dispense the libation of lowered rates for maximum effect.

    After the embarrassment of the bank run, I doubt the FSA or the BoE will dare make a move without the prior agreement of No 10 Downing St.

    Comment


    • #3
      Re: BoE did not cut interest rate

      ECB didn't either.
      Mike

      Comment


      • #4
        Re: BoE did not cut interest rate

        Gordon Brown seems likely to announce a general election on Tuesday.

        In his shoes, I'd do the same.

        [For the benefit of our American friends, the UK does not have fixed-term elections, and the Monarch can dissolve Parliament and call new elections at any time. In practice this is invariably done at the Prime Minister's request]

        Comment


        • #5
          Re: BoE did not cut interest rate

          Originally posted by Arnric62 View Post
          Gordon Brown seems likely to announce a general election on Tuesday.

          In his shoes, I'd do the same.

          [For the benefit of our American friends, the UK does not have fixed-term elections, and the Monarch can dissolve Parliament and call new elections at any time. In practice this is invariably done at the Prime Minister's request]
          His timing is unlikely to be much better. After a recent trip to London my sense was the country seems almost eager to embrace Gordon Brown's nostrum of sobriety, as an antitoxin to the residuum of the Blair years. Her Majesty's Loyal Opposition seems conspicuous only by its relative silence.

          I would wager there will be a BoE interest rate cut before election day, barring a surprising leap in economic growth.

          Comment


          • #6
            Re: BoE did not cut interest rate

            Our useless "opposition", the Conservative Party, may one day win power by default (rather as the Democrats are likely to in the US in 2008), but that day is not yet. Labour will win again, probably with an adequate-to-handsome majority.

            The BoE has already had its October meeting, and polling day is likely to be either 1 or 8 November. [Another of our strange customs is holding elections on Thursdays, although there is no legal requirement to do so.]
            Personally, I don't think they are likely to cut quite yet.

            Comment


            • #7
              Re: BoE did not cut interest rate

              Originally posted by Arnric62 View Post
              Our useless "opposition", the Conservative Party, may one day win power by default (rather as the Democrats are likely to in the US in 2008), but that day is not yet. Labour will win again, probably with an adequate-to-handsome majority.

              The BoE has already had its October meeting, and polling day is likely to be either 1 or 8 November. [Another of our strange customs is holding elections on Thursdays, although there is no legal requirement to do so.]
              Personally, I don't think they are likely to cut quite yet.
              Arnric62: It's great to get a first hand perspective from someone up close, on-the-ground. I didn't realise that UK election rules allowed such a short campaign period! Well at least you are spared 18 months of CNN sponsored stage-managed candidate "debates"... ;)

              An aside, I found the best croissants I've ever enjoyed at Cafe Valerie on Brompton Rd. Better than anything I was ever served in France, and the staff are friendlier too. We've taken to holding informal "Board meetings" there on occasion.

              Comment


              • #8
                Re: BoE did not cut interest rate

                [Eats hat]

                No election it seems. After weeks of preparing the ground for an election, the "wee timorous beastie" at No.10 has changed his mind after a run of poor opinion polls.

                In my opinion, he would have won. Now, as the economy sinks, it will drag him down with it.

                Comment


                • #9
                  Re: BoE did not cut interest rate

                  Originally posted by Arnric62 View Post
                  [Eats hat]

                  No election it seems. After weeks of preparing the ground for an election, the "wee timorous beastie" at No.10 has changed his mind after a run of poor opinion polls.

                  In my opinion, he would have won. Now, as the economy sinks, it will drag him down with it.
                  I suppose that old saw about a week being a long time in politics has proven true yet again. A rate cut (or three?) before the election would appear to be back in the cards. How much longer does he have before he HAS to call an election?

                  Comment


                  • #10
                    Re: BoE did not cut interest rate

                    Under the Septennial Act 1715, as amended by Section 7 of the Parliament Act 1911, five years is set as the maximum duration for a Parliament. In theory, once five years has passed a Parliament expires but in practice the Prime Minister normally requests a dissolution from the Monarch before that date. The five years run from the first meeting of Parliament following the general election.

                    Parliament is dissolved by a Royal Proclamation. The same Proclamation also orders the issue of writs for the election of a new Parliament. Writs are issued by the Clerk of the Crown and go to Returning Officers, requiring them to cause elections to be held. The writs also name the date on which the new Parliament is to meet. The election is held 17 working days after the date of the Proclamation and the issue of the writs ordering the holding of elections.

                    I believe the rationale for the odd period of 17 working days is that it is three weeks plus the extra two days it used to take for the writs to be carried to Edinburgh by government messengers on horseback!

                    The current Parliament was summoned to meet on Wednesday 11 May 2005, so would cease to exist at midnight on Monday 10 May 2010.

                    Comment


                    • #11
                      Re: BoE did not cut interest rate

                      Originally posted by Arnric62 View Post
                      Under the Septennial Act 1715, as amended by Section 7 of the Parliament Act 1911, five years is set as the maximum duration for a Parliament. In theory, once five years has passed a Parliament expires but in practice the Prime Minister normally requests a dissolution from the Monarch before that date. The five years run from the first meeting of Parliament following the general election.

                      Parliament is dissolved by a Royal Proclamation. The same Proclamation also orders the issue of writs for the election of a new Parliament. Writs are issued by the Clerk of the Crown and go to Returning Officers, requiring them to cause elections to be held. The writs also name the date on which the new Parliament is to meet. The election is held 17 working days after the date of the Proclamation and the issue of the writs ordering the holding of elections.

                      I believe the rationale for the odd period of 17 working days is that it is three weeks plus the extra two days it used to take for the writs to be carried to Edinburgh by government messengers on horseback!

                      The current Parliament was summoned to meet on Wednesday 11 May 2005, so would cease to exist at midnight on Monday 10 May 2010.
                      Plenty of time, then, for the redemption of Mr Brown (and David Cameron?) in the minds of the ever fickle voters...

                      Comment


                      • #12
                        Re: BoE did not cut interest rate

                        Plenty of time, then, for the redemption of Mr Brown (and David Cameron?) in the minds of the ever fickle voters...

                        I think Brown's goose is cooked. The first major decision he has taken since his elevation has annoyed the Press and reawakened all the old accusations of indecisiveness and lack of moral courage that plagued him in the past. He will receive no quarter from now on.

                        Much as I despise David Cameron (May his name be blotted out!), I suspect he is now well placed to win the next election.

                        Comment


                        • #13
                          Re: BoE did not cut interest rate

                          By the way, there seem to be the first clear signs of a house price crash in the UK -

                          http://www.telegraph.co.uk/money/mai.../cmhouse07.xml

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