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Bank Of England Faces A 3 Way Tug Of War

News that the Monetary Policy Committee (MPC) is likely to see a 3 way split at the next meeting to set interest rates brings the current economic environment into focus.

On one side we have those who feel that inflation needs to be controlled and rates increased to stem spending in the UK. This is by far the least preferred option in the City but one which still demands consideration in the current situation.

Option two sees the Bank leave rates as they are and see the lay of the land as the months progress - giving the ability to let the economy settle before taking any drastic action. This is probably the more likely of the results at the next meeting, but it is not set in stone.

Option three is the one which many in the City feel is inevitable at some stage, the need to reduce rates and refloat the economy with cheaper finance. This would help to reduce the financial pressures many are feeling and should see the property market start to receive substantially more interest from buyers.

The next MPC meeting is a very difficult one to call as there are pros and cons for each of the above strategies.

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