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

Interest-Rates / UK Interest Rates Oct 01, 2007 - 12:54 AM GMT

By: Nadeem_Walayat

Interest-Rates 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.

Related recent UK interest rates and housing market articles -

By Nadeem Walayat
(c) Marketoracle.co.uk 2005-07. All rights reserved.

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

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

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