The Governer of the Bank of England had said previously that there was little more room for manouvre in trying to help the UK economy pull out of recession, and most commentators expected there to be no change this month.
“The MPC’s decision to hold in the base rate this month is not a surprising one," said Brian Murphy, head of lending at broker Mortgage Advice Bureau. "In recent months, the cost of borrowing has all but lost any linkage to the Bank Base Rate and any further cut is largely superfluous as far as many borrowers are concerned, except those who are on bank base rate trackers without a collar.
“It would appear that the MPC have this month taken a breath following six consecutive monthly reductions and decided a wait and see policy is required to monitor the effects of the previous month’s reductions and the recent quantitative easing process.
“The situation as it stands is no longer about the price of money, but availability, and the capacity for lenders to be able to lend. We have now reached a point in the cycle where the MPC are employing alternative tactics to facilitate repayment and are taking a step back in order to analyse the effects. This month’s decision is a welcome one and I wait with baited breath to see what the longer term outcome will be.”
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