MPC throws down the gauntlet to Clearing Banks
Well, the Bank of England’s Monetary Policy Committee’s surprise package today has put the major clearers on the back foot a little. In particular, those banks that have been raising tracker rates by 50 basis points in recent days in anticipation of the Bof E’s rate cut of the same proportion will now be really open to criticism if they don’t pass the cut onto customers.
The 3 month Libor inter bank lending rate now stands 2.6% above the base rate. The difference between the two rates in the UK is larger than the equivalents in the USA, Japan and the Eurozone, so we should see the Libor easing still further in the days to come.
With inflation rates likely to be heading south in the coming months, and lower interest rates on loans and mortgages becoming more readily available,consumers and cash starved businesses may start to feel a little more positive about their future prospects soon.