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MPC keep rates unchanged
The February meeting of the Monetary Policy Committee
(MPC) saw rates held unchanged at 4.5%. This was widely expected
by the various people who monitor the MPC’s activities,
and while it isn’t the good news for mortgage holders that
a rate cut would have been, it is by no means bad news.
With the base repo rates remaining unchanged for the sixth consecutive
month, people who have mortgages that track the base rates will
not see any changes in the cost of their mortgage.
The MPC took the decision to hold the rates at 4.5% based on
a number of factors, the main influence coming from the consumer
price index (CPI) that tracks inflation, which is currently running
on target of 2%, something that the MPC is keen to keep that way.
Generally speaking the economy has been performing well over the
last couple of months, with consumer spending improving following
the slump towards the tail end of last year, and house sales are
also faring well in the current climate.
Given the figures so far, it would appear that the cut in rates
made by the MPC in August of last year was a timely one, and that
has sparked a renewed interest in the housing market, and has
also led to people feeling more relaxed with spending their money
and so the high street has seen better times of late.
There are feelings that while the in the short-term the economy
is running on-target, as it is meeting the inflationary expectations,
this may not continue into the medium and long term without further
intervention from the MPC. Many experts believe that a cut in
rates will be necessary within the second quarter of this year,
if this is the case then it will be good news for those with mortgages,
as it will reduce the cost of borrowing.
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