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Bank of England base rate

In a dazzling display of dour predictability the Bank of England today
cut rates by the expected 0.25% to 5.0%.
This was a good opportunity to finally take the gloves off and knock at
least a half point off the Base Rate in order to have a more substantial
effect. In reality this quarter point cut will not have a massive effect
as it will just go part of the way to offset the larger hikes in
interest rates that lenders themselves have initiated over the past
weeks. There is also no guarantee that lenders will even pass on this
cut to customers, unless they are already on a BoE base rate tracker
The problem is still that many lenders are funding their products from
the money markets, and the cost of borrowing on this basis remains
artificially high reflecting the current issues attributed to the liquidity crisis. So the Bank of England Base rate is actually having a minimal effect.
What is really needed is a more severe cut in rates coupled with a positive pumping of funds into the financial system to help restore liquidity.
But the BoE are still mainly concerned with inflationary pressures when many critics argue that they should also be concerned with asset prices, such as the housing market, as well.
To quote the famous economist JM Keynes, as many others are already
starting to do, this quarter percent cut, although a step in the right
direction, will have as much effect as pushing a piece of string.


Clients should be contacted sooner rather than later

I take exception to your columnist Ju-lian Wells saying it is a worrying development that brokers are contacting their clients months before their deals come to an end (Mortgage Strategy March 31).

Paragon staff down by 30%

Paragon Group last week confirmed that it has reduced its staff by a third.This follows the transfer of new business processing from its intermediary-focussed buy-to-let arm Mortgage Trust from Epsom to Solihull.The news comes despite Paragon’s buy-to-let index showing that the private rented sector remains strong, with average rents peaking at £11,886 in February, up […]

Last lap

After a couple of visits to the oeteopath and a few calisthenics, Vanessa Blount’s knee is on the mend.


What employers should expect over the next five years

A major feature of our articles is looking into the Jelf Employee Benefits crystal ball to predict changes and trends that may influence the short and medium term shape of UK employee benefits.  By flagging such changes early we aim to provide our followers with the tools to make sensible and informed decisions on their benefits offerings.


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