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Bank of England Watch and Wait with Interest Rates
Much as they did in January after making a cut in the interest rate at the end of 2007, the Monetary Policy Committee of the Bank of England has decided to keep interest rates at their current level following January’s move from 5.5 per cent to 5.25 per cent.
This appears to have come as no surprise to those financial experts who are following the current situation in Britain’ economy ahead of Alistair Darling’s first Budget as Chancellor next Wednesday.
It won’t be of much use to those who owe though, and may encourage even more people to get help with debt management, IVA advice, a secured loan or a second mortgage before they are beyond help.
Inflation has risen above official targets to 2.2 per cent while oil and wheat prices have increased (oil has hit a record level), and manufacturing and services companies have also seen their costs creep up.
The Bank has had to make a difficult decision to keep a rein on inflation while also encouraging spending in the high street and trying to loosen the hold that the credit crunch has taken on lenders purse strings.
This move is in line with other economies around the world as they also try to get a grip on tough conditions in the markets. The European Central Bank also held their own interest rate at 4 per cent this week but the Federal Reserve in the United States has had to drastically cut their rate from 5.25 per cent last September to just 3 per cent now as a recession is threatening.
What do the current conditions and rates mean for you?
You’ll already have noticed your energy bills going up recently and the AA has said that the average price of petrol has reached 105.7 pence per litre. It was ‘only’ 88.32 pence last year. Hope full we won’t see an increase in fuel duty next week.
It also means that we’ll all have to pay more for food, fuel, and manufactured goods while policies controlling lines of credit are going to remain frustratingly rigid for most lenders. Basically it boils down to more tightening of our belts and preparing ourselves for a bumpy ride this year.
With less credit it’s best to be wise with your spending and put as much money as possible toward reducing your risks, whether that’s by getting a decent plan of action to deal with your debt or by cutting down the number of companies and people that are owed money by consolidation.
IVA News posted on 07 March 2008
