UK Interest Rates Expected to be Kept on Hold at October MPC Meeting as House Prices Flat line

By: Nadeem_Walayat

The Bank of England is expected to keep UK interest rates on hold at 5.75% at Thursdays MPC Meeting. Confirming forecasts that UK Interest rates have now peaked.

Events surrounding the ongoing credit crunch that was evident in the run on Northern Rock Bank during September are likely to ensure that the Bank is adopting a more dovish tone to UK interest rates with the next move expected to be a cut. The Bank Governor was highly criticised for acting to late to prevent the run on Northern Rock Bank and therefore it is likely that the Bank of England is now under greater direct or indirect government control than before the crisis.

The Market Oracle forecast as of 22nd August 2007 is for UK interest rates to fall to 5% by September 2008, with the probable date for the first cut being January 2008, though events may force an earlier cut if the UK housing market or the financial markets crash between now and then. The Market Oracle forecast for UK house prices is for a fall of 15% over the next 2 years as of 22nd August 2007.

Latest Housing market statistics continue to support a slowing housing market with Home Track reporting unchanged September house prices at £176,000 which is some 5.8 X average earnings, the last housing bust ended with UK houses being priced at less than 3 X earnings.

Recent Market Oracle articles have highlighted the opportunities available to savers to benefit from high fixed interest rates that may not stay on the table for much longer. Already the Halifax has started cutting its fixed websaver rates, therefore savers need to act rather than delay further to lock in high rates.

• Savings Accounts Fixed Rates Still Simmering, But Variable Savings Start to Hot Up and an Internet War Begins! -28th Sept 07
• Best Mini Cash ISA Tax Free Savings Accounts - September 2007 - 22nd Sept 07
• The Halifax Websaver's Fixed Interest Rates Savings Accounts - Sept 07 - 21st Sept 07
• UK Banks Short on Cash Entice Savers With High Interest Rates - 9th Sept 07

Related recent UK interest rates and housing market articles -

• 25 Sep 2007 - UK Housing Market on Brink of Price Crash - Media Lessons from 1989!
• 18 Sep 2007 - UK Interest Rates Forecast to Fall to 5% by September 2008
• 22 Aug 2007 - UK Housing Market Crash of 2007 - 2008 and Steps to Protect Your Wealth

By Nadeem Walayat
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Nadeem Walayat is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 100 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

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