Help Sitemap Home Skip Navigation Contact Us Disability Statement


Interest rates on hold as fears remain

Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image
Click on thumbnail to view image

Published Date: 03 August 2008
By Rosemary Gallagher
INTEREST rates are expected to be held in Britain and the US this week as the Bank of England and Federal Reserve battle with the economic downturn and inflation.
The Bank of England is expected to hold interest rates at 5% on Thursday amid fears that inflation will rise above 4% next year. However, the decision is expected to be a difficult one following July's meeting of the Monetary Policy Committee, which saw a three-way split in votes.

David Blanchflower said a rate cut was needed to prevent the economy slipping into recession, while fellow member Tim Besley wanted to hike rates to show the Bank was serious about fighting inflation. The remaining seven members chose to leave rates on hold.

Howard Archer, chief European and UK economist with Global Insight, said that if the Bank of England does move interest rates in the near term it will be more likely to raise them rather than cut them.

He anticipates interest rates will stay at 5% until the end of 2008, before being cut steadily to 4.25% by mid-2009 and to 3.75% by the fourth quarter of next year.



Page 1 of 1

  • Last Updated: 02 August 2008 3:07 PM
  • Source: Scotland On Sunday
  • Location: Scotland
  • Related Topics: Interest rates
 
1

david hill,

bern, swiss 03/08/2008 19:33:19
Re: Britain’s Financial Woes are just beginning

Britain is in for the worst economic hammering it has witnessed since the end of WW2.
In this respect there are now major pointers emerging, which should send shivers down the spines of the British electorate.
Indeed recently, the Bank for International Supplement, the organisation that fosters cooperation between central banks, has warned that the credit crisis could push world economies into a crash on a scale not seen since the Great Depression.
As an example of what the central banks are saying also, the reserve bank of India stated just 6-days ago that to address the world’s financial crisis, central bank interventions have been staggering and on a level not witnessed since the Great Depression. But will the central bank support be enough is the critical and worrying question. Indeed recently again in this respect, the International Monetary Fund (IMF) stated also that the world is witnessing the greatest shock to global finances since the 1930s. Further, central banks led by the US Federal Reserve, have already piled help and credit on the financial system over the past 12-months, as they did again only this week, to nurse it through this pending economic disaster. Therefore this need will certainly arise continuously to weather the storm, if we can, as the pointers are looking very bleak indeed. Now unfortunately adding to this, the problems are spreading with evidence that started as a financial-sector crisis is just starting into a business crisis. Indeed with no finance, business will find it hard to survive and with the size of HBOS's recent failure to raise funds together with the price of underwriting an issue, it will be impossible for others to do likewise from now on. Therefore our banks will have major liquidity problems and failures for many years to come. Indeed, they will probably not stabilise again for at least a decade. For as Capitol Economics stated recently, we should be preparing for r
2

david hill,

03/08/2008 19:33:49
continued

For as Capitol Economics stated recently, we should be preparing for recession, it's more likely than not. In this respect consumers are going to get hit where it hurts by a mixture of the housing market downturn and inflation they stated. People will see growth falling from 2 per cent in 2008 to flat (zero) next year and added to this, companies will see their profits fall dramatically. Consequently one can predict that firms, due to the lack of financial stability and ‘inadequate liquidity’ of our banks, will not be able to borrow. As the financial crisis becomes a firm business crisis Capitol Economics predict unemployment will increase from 1.6 million people to 2.5 million and while falling house prices do not hit pockets, lost jobs do they say. Therefore the effects of this present financial crunch will last for years for businesses and where others will not even survive to see the recovery at all.
All this shows that financial regulators throughout the world are not robust enough and have not enough power to curb the excesses of the financial world. Governments therefore, when this is all over, should make sure this time, that the full market philosophy is kept firmly in check. If not, what we are experiencing now will happen time and time again. The ‘free’ market has got to change therefore and where the public (consumers) always learn the hard way, for they are the ones the banks really hurt and of course the ones who have to ultimately pay.
Dr David Hill
World Innovation Foundation Charity (WIFC)
Bern, Switzerland
3rd August 2008
UK Postal Address: PO Box A60, Huddersfield, HD1 1XJ
UK Contact No: 01484 537181

 

Comment on this Story

 

In order to post comments you must Register or Sign In

 
 
RSS Feed of this article's comments
Delivery formats: RSS, Atom, Javascript & Email
 
  

 
 


Sister Newspapers:
Press Complaints Commission

This website and its associated newspaper adheres to the Press Complaints Commission’s Code of Practice. If you have a complaint about editorial content which relates to inaccuracy or intrusion, then contact the Editor by clicking here.

If you remain dissatisfied with the response provided then you can contact the PCC by clicking here.